Trials & Tribulations of a Modern Stock Trader

It is not easy to be a stock trader. This job comes with lot of trials and tribulations and only the traders who are able to overcome these little tests that stock market puts on them will be able to make a profitable career and a rich portfolio in trading stocks.

Keeping It Real

Good trader is the one who have realistic investing expectations. Lot of beginners tend to be to optimistic when it comes to their profits and their whole career in trading. Тhese Scrooge McDucks with dollar signs in their eyes are discarding few hundred dollar profits thinking that they can earn much more money. Good trader should know that any kind of profits is a good one, and that it is impossible to hit a home run, the moment after he/she entered the game. Beginners also tend to disconnect themselves from the reasons they entered the trade and the short- and long-term financial goals they set before investing on the market. Then they start gambling on the market which can’t be lucrative on the long run and it can easily end up in financial disaster.

Getting the Right Information

Getting relevant information is one of the most important thing when it comes to stock trading. Before people rely on brokers who offered sold them stocks and provide them with information and rumors about the new trends on the market. Lots of brokers were using their position to lead people to invest in some of their pump-and-dump schemes. Now when people can buy stocks online, without getting expert opinions from the brokerage agents, being well-informed became one of the prime characteristics of successful trader. Now there are plenty of information sources that can be used for this purpose. They range from financial journals, online brokerage accounts, financial TV shows etc. By far the most effective way for staying informed is by using real time software that will be able to download market information as it happens and display it on desktop computer, tablet or smartphone.

Staying Sane

Everybody who saw the inside of a stock market’s building definitely knows about the hectic atmosphere there which is always on the verge of a total breakdown. That’s why the biggest enemy of some traders after a low-profitable stock can be their own brain. Many brokers think that adrenalin rush that comes with fast changing stock prices is the reason why their job is so vibrant and interesting. This is also a common cause of psychological problems that make traders frustrated about their losses, which impacts their decision-making process. Trading is the game where only the most knowledgeable and the luckiest win and building good portfolio comes with lots of wins and losses that are simply part of the game. Seeing losses as the personal defeats leads to bad things. That’s why traders need to look at the world from more positive perspective.

Staying Solvent When Market Is Irrational

This is especially hard when market is disrupted. Laymen like to say that market can stay irrational longer than you can stay solvent, which is just partially true. It is true because traders can’t earn serious profits by shorting the market, especially if they do that with drastic cuts, or by selling all of their stocks short. Much better tactics in this case is to go short steadily, or to sell less than 10% of the assets each year. Market irregularity is not a problem when traders have diversified portfolios and when they remain calm when the market turbulence start.

In spite of all these difficulties this is after all one interesting and well-paid job, and people who approach it in the right way will definitely be able to accomplish all of their financial goals.