Prepare for failure from "summary" of Trading Psychology by Anirudh Sethi
It is important to be prepared for any potential failures that may arise in the journey towards achieving success. Having an understanding of how to overcome difficult times and stay motivated are crucial elements of success. Taking the time to develop a plan and be prepared for any situation will help ensure that any potential failure is well managed.- Failing to prepare for failures leads to greater losses, both money as well as psychological stress. It's critical to identify potential failure points in trading and create contingency plans accordingly.
- There are multiple ways to guard exploit any possible setback. Analyze what you might lack in terms of research and risk management approaches and rectify them.
- Assessing the negative situations which might arise at every step while trading eliminates the element of surprise. Make use of simulations and trial runs if needed, or paper trades if it’s an unfamiliar market.
- Setting up a stop loss or trailing stops helps in prevent huge losses. Being realistic about your timeframe is also essential since jumping into unrealistic expectations can lead to unexpected results.
- While everyone wants to make profits, it’s important to accept that losing trades too are part of it. Don't expect perfection from yourself and be prepared ideally for unfavorable outcomes.
- Suite oneself with pre-defined rules before trading in stock markets. This prevents reckless decisions and provides clear guidelines for trades. Every measure should be tailor-made for one's personal objectives, preferences and financial goals.
- Having backup strategies assists in averting major damages in case of unpredictable market movements. Establishing your cutoffs ahead of time helps in being ready for different scenarios and avoiding unanticipated consequences.
