Updated: 2 days ago
Introduction
Share Market Trading / Investment is often called a Game of Uncertainty!
Personally, I like to call it a Game of Probability.
We cannot say with certainty how much price of a Share will rise!
We do not even know for sure whether the price will rise or fall!
But, there are ways and methods using which we can check the Probability of what can happen!
We can check what is the probability that price will rise? What is the probability that price will fall?
After doing their Probability analysis, Traders and Investors then take their Buying / Selling decisions by reacting to current price moves.
2 things help them in their decision making -
Analysis of what is happening currently .
Their Approach to what is happening currently.
In this post, we are going to talk about having a proper approach towards Buying / Selling!
2 Incorrect Ways to Approach Share Markets
Let us first take a look at 2 very common, but incorrect ways in which people approach Share Markets.
Both of these approaches can lead to Inconsistency in Returns.
# The Gamblers Approach!
Thought process - I am Ready to risk big losses in hope of making big profits!
Gamblers Approach is where you Buy / Sell without any idea about how things will work out!
And also Where you have zero idea about what will need to happen for you to make profits!
Just like when you Buy a lottery ticket!
Also, It automatically becomes a gamble when you do not pay attention towards the things which are required for success!
While Buying/Selling Shares, for someone who has very little idea about how the market functions, and does not know what it takes to make money in this business, it automatically becomes a gamble!
Such a person will buy Shares and simply hope for the best!
But Sometimes, Even people with knowledge of how the markets work, are seen taking unnecessary / irresponsible decisions!
Why?
Stock markets are often marketed as a place where money can be earned quickly!
This leads the trader / investor into this Gambling trap!
But, this cannot be the approach of someone who wants to be a consistently successful trader / investor!
Isn't it?
# The Gamer's Approach!
Thought Process - I know that I will make money sometimes and I will also lose money sometimes!
But, While Buying/Selling shares, shouldn't we be ready for an occasional loss also?
So what's wrong with this thought process?
Well, yes, an occasional loss is always a possibility!
But, What if, You Buy, Even after seeing that the probability of you losing money is greater than making a profit?
This is where the Gamer's Approach has kicked in!
Because of this thought process, the person taking a Gamer's Approach into Buying/Selling of Shares, will be ready to take every trading opportunity that comes along! without focusing on risks!
Why?
Well, You simply cannot win every game! Can you?
And In a game, participation sometimes is more important than winning / losing!
This Gamer's thought process can make the trader/investor carelessly participate without keeping much track of the results!
Of course, This Gamer's Approach can sometimes help you to get over an occasional loss also! where you can avoid beating yourself up after a loss!
But this also cannot be the approach of someone who wants to be a consistently successful trader / investor!
So, what is the solution?
Have A Business Approach to Buying/Selling
Use this simple trick. Every time you Buy/Sell, Ask yourself - WHY M I BUYING / SELLING THIS SHARE, RIGHT NOW, AT THIS PRICE?
Ideally you should be able to give yourself a very clear and to the point answer!
A successful Business person will always be selective about his/her money decisions!
Why?
Because they know the importance of risk management!
No Money ... No Business!
Similarly, No Money ... No more Trading/Investing!
While Buying/Selling Shares, this Business approach will help the trader / investor to filter opportunities and decide better about where to Buy and where Not to Buy!
There is always a reason why Share prices rise or fall!
Learn to identify the reasons. Only then Share market Buying/Selling can become a consistently fruitful activity!
Always remember, In this Share market business,
Consistency in earning Profits is lot more important than Speed of earning Profits!
We at Learning Stocks - share market training give a lot of importance to taking this Business Approach to investing/trading.
Share market is nothing but a business of a different kind!
Anyone can be successful in it!
What you need is developing the right kind of thinking and making the right kind of preparation!
As always, We Wish you a Happy and Prosperous Trading/Investing journey.