Stocks & Commodities V. 31:8 (40-42, 52): Keep Your Portfolio Safe by Azeez Mustapha

Keep Your Portfolio Safe by Azeez Mustapha

Unleash The Victor

We often find ourselves making the same mistakes over and over. Coming to terms with the reality of trading can help you break those bad habits. Find out how.

Most traders do not take risk control and money management seriously, which is why many are unable to enjoy long-term survival. Logical reasoning tends to give way to inordinate emotions, but emotions are merely biological events like a cough or a sneeze with no meaning and are the opposite of thinking. Most market speculators like to think that the secret to trading success lies in trading strategies that allow them to enter at the right price, giving no thought to risk-control measures or discipline. Knowing how to limit losses, how to survive protracted losing streaks, how not to lose courage in the face of losing trades, how to control the emotions of avarice and dread, how to come to terms with reality in trading, and how to keep on being hopeful by encouraging yourself and other market speculators will go a long way in helping you to evolve as a market wizard.

Coming to terms with reality

Information is vital in conditioning the mindset of a market speculator. In order to win constantly, you would need to do what most others would not want to do. There is also a need to learn what it takes to be a permanently successful trader. Each individual or group that speculates or trades employs a method that enables them to know when to buy or sell. Some combine two or three trading methods on one account. Some use fully-capacitated robots, whereas others use rule-based systems. A trader who follows long and short recommendations from a signal provider is also using a strategy.

Trading, however, is no picnic. Every good strategy has good and bad periods. Those who are aware of this tend to look for a strategy that has long withstood the uncertainties of the markets. Many people prefer a foolproof trading system that triumphs in all types of financial markets and survives all market conditions. Novel methods of approaching the markets are getting discovered all the time; time horizons are being tailored to allow high-frequency trading; and programs are being written to create more robust and highly complicated strategies.

Charles Kirk of The Kirk Report (www. kirkreport.com) began trading with a $2,000 deposit in 1993 and now trades with a $3 million portfolio. Since 1999, he has been a self-employed, full-time, independent trader. If he were not able to keep his account safe when it was $2,000, he would not be able to keep it safe when it’s $3 million. According to Kirk, the best traders will be wrong 40% of the time.

There are two ways of becoming a consistent victor on the battlefield of the financial markets. One is to assimilate the market dynamics, and the other is to keep your emotions in check. Both are a daunting undertaking, but there has to be a way of conquering both.