Learn the psychology of option traders and learn why they lose money.

There are certain days when Option Buyers make small profit and Option Sellers lose HUGE.

Look at this graph of Nifty on 07-June-18:

NSE 7-June-18

There is no stopping.

What does an option buyer think?

Wow huge profits – buy at 10 am and sell at 3 pm.

But what happens in reality? Buy at 10 am and sell at 10.30 am. A very small profit and then regret of leaving money on the table.

And what happens to option seller?

Sell at 10 am on the hope that Nifty will fall down – but do not exit at 11 or 12 or 1 or 2 because of the HOPE that Nifty will fall and they can exit in profit. Ultimately exit at 3-3.25 pm with a huge loss.

When you become a buyer you take a small profit and exit and regret later leaving more profits on the table and when you become a seller you take huge losses in hope of reversal.

This life of a trader when he trades without a plan, without hedge, pure speculative trading or worst way to trade – take tips.

If you keep trading like this you will NEVER succeed as a trader.

You must learn to trade with a plan, learn to hedge and take help from a mentor to trade correctly.

You must not lose money to make huge money – that is the MOST IMPORTANT PART OF TRADING OR INVESTING.

Today morning I got a call from someone who lost 7 lakhs due to tips providers in a single day. If you will not learn trading yourself you will go to tip providers and lose even more money.

So if you really want to be a good trader and trade without stress and make monthly income you can do my course.

Nifty Conservative Course is for beginners:

Bank Nifty is for experienced traders.

Fees can be paid here. There is a discount if you do both the courses.

In media, news channels and among traders there goes a lot of buzz on what will be decision of RBI policy, its impact on stock markets, what trade to take based in RBI policy – go long or short, buy calls or puts, which stock to buy or short etc.

Whenever someone gets a strategy they start back-testing forgetting that a strategy can be made based on back test, but can you really future-test a strategy? You cannot. For that you have to trade that in live markets.

I personally do not believe in back-testing but for those who believe one of my course subscribers did a back-test on my Conservative Nifty Strategy for 2 years and found it too be superb. He is an experienced Technical Analyst and Full Time Trader. He did my course in 2015, so is it working now? Yes Course Testimonials of Year 2018 are proof of that. Three years in a row if a strategy is working in live markets then it will work in future too.

My strategies work because they are non-directional in nature and are properly hedged. Non-directional takes care of avoiding speculative trading, trying to be rich overnight and hedging takes care of restricting the losses. Hedging takes out the fear factor and non-directional takes out the greed in you.

Both combined obviously will have an effect for a life time and then you can pass this knowledge to your kids as well.

Coming back to the topic – it is quite strange that no one is interested in back-testing what happens to stock markets when RBI policy is declared. The result is known to everyone – nothing major happens to Index at least, barring a few stocks here and there – yet traders in India take too many speculative trades on this day.

Banking stocks will see increased volumes on the RBI policy day. And India VIX will increase. Here is a screenshot of India VIX on 06-June-2018 – see that it has slightly increased:

India VIX on 6-June-18 1.29 pm

There is a chance that India VIX will drop once the RBI policy is announced. This is the only common factor that happens on any major policy decision day either by RBI or by the Government of India.

And here is screenshot of NSE on RBI policy day 06-June-18:

NSE on 06-June-2018

Can you see it looks like just other normal trading day.

Yes it is only the General Budget that moves the markets for a short time, otherwise other news if not major – it really does not have any major impact on the stock markets. It may have a minor impact but should it really matter to you as a trader?

You can back test and see what I am saying is true, yet traders increase their speculative traders on the RBI policy day.

Let media do what they want to do, but you as a trader, its better you avoid such noise else you will damage your trading account.

Hope you have learned something from this article. Speculative trading either on a major news day or a normal day will do nothing to your trading account except adding losses.

I keep getting calls from people all around India telling me that they have allowed someone else to trade in their account and are now losing money heavily. Do not let anyone else trade in your account. Keep your account username and password secured like you keep your bank account password secured. Let us see what damage it can do.

Out of greed/expectation/laziness/in faith or for whatever reason people let someone else (mostly brokers) trade in their account.

This is a a very bad practice and should never be done. Do not allow anyone whether your broker or friend or relative trade in your account on your behalf. You do not know what they have in mind and what they may do to your account.

I hope you have an idea of trading fraud. Trading fraud is shorting a low liquid stock in huge quantity in someone else account and when the stock falls buy in their own account. When the stock rebounds, they immediately sell for a profit.

Of course this is not possible in a small account but possible in a big account like 10 lakhs and above. For Intraday shorting 5x (five times) leverage is given. So a 10 lakh account can short a stock intraday for 50 lakhs. For a low volume stock this is a huge short and immediately the stock will fall, giving a great opportunity for a trading fraudster to make 5 times the money in his account in a single day.

Look at this PC Jewellers stock price on 2-Feb-2018. The stock opened at 460, went down all the way to around 220 and bounced back to around 400. All within minutes. Imagine if someone bought the stock with 5 times intraday leverage 10 lakhs at 220 and sold at 400. This would have resulted a profit of:

50,00,000/220 = 22727 stocks bought.

400-220 = 180*22727 = 40,90,860.00

That is a profit of Rs. 40,90,860.00 (40 lakhs 90 thousand 860) in a single day:

PC Jewellers stock price on 2-Feb-18

However the above is just an example. It may not have happened but I wanted to explain to you a fraud possibility. Who bears the loss of Rs. 40 lakhs 90 thousand 860? The person on whose account the stock was shorted.

May 6, 2010, Flash Crash was done by Navinder Singh Sarao, a trader who damaged stock markets in US sitting in his home. This was a United States trillion-dollar stock market crash done by not fraud as written above but spoofing algorithms. He made more than $40 million in profit from trading during the Flash Crash in a single day. Sarao was released on a £50,000 bail with a full extradition hearing scheduled for September with the US Department of Justice. No idea where he is now.

Spoofing is shorting millions of dollar of stocks and then cancelling immediately and then buying at the bottom. This is done in milliseconds by software. The world over now spoofing is banned. Now before placing an order a check is done. If you place a limit order for shorting stock, a check is done by system to see if the shorting is done within specified limits else the limit order is cancelled.

So do not let anyone trade on your behalf in your account.

On 24-May-2018, BANKNIFTY closed at 26016.18:

BankNifty 24-May-2018

But something strange happened. See this image:

BankNifty Option Closing Price on 24-May-18

What is the problem?

Options on the expiry day after trading is over expire worthless if Out Of Money (OTM), or At The Money (ATM), or just have the intrinsic value left for options that are In The Money (ITM).

If you are trading bank nifty weekly options my bank nifty weekly course will help you a lot to trade bank nifty weekly either intraday or positional. You can use these properly hedged strategies to trade in stocks and nifty also.

What is intrinsic value of options?

Intrinsic value of options is the difference between the index/stock price and the strike price of the option. For example if BankNifty spot is 26100 then 26000 CE on expiry day will be trading near the difference between 26100 and 26000:

26100 – 26000 = 100

But sometime they trade below their intrinsic value. A few points is ok and accepted but yesterday something strange was seen. Check the image above. Look closely the closing price of 25800 CE. It closed at 132.90.

Lets us check its intrinsic value:

26016.18 – 25800 = 216.18. But it closed trading at 132.90.

Difference between actual intrinsic value and closing price:

216.18 – 132.90 = 83.28

I have seen difference up to 10-20 points and its common now a days.

Why this happens?

This happens because liquidity is very low in deep In The Money options when it nears expiry and traders trade at whatever rates they get. You see the system decides a rate but if no one is willing to trade at that rate then option will be trading lower than its intrinsic value. System cannot force them to trade at the proper intrinsic value.

If you are an experienced trader you may be knowing that deep out of the money options on bank nifty weekly expiry are traded at lot. Basically traders sell these options to make a quick buck the same day. Sometimes they succeed, sometimes they do not. But frankly trading deep out of the money options is a very dangerous game. One sudden spike may take out months of profits. And if you go very deep you will get like 2-3 points. What will you do with that 2-3 points which will go anyway in brokerages?

So should you sell In The Money Options on expiry day?

This is even more dangerous. What if this does not happen next week? You sell deep In The Money Option and suddenly BankNifty jumps 100 points – then you will find the In The Money Option also jumping 70-80 points straight away. Do not forget that today more than 20% of options are traded on algorithms. As soon as there is a spike these algorithms will take either a stop-loss or get into a buy position to take benefit of spike and eat 5-10 points that they are supposed to do. Yes algorithmic trading is like that. They get into the trade and get out of trade in seconds as soon as they see a profit.

Retail traders are fighting against the algorithmic trading done a lot and massively on expiry day – that is the reason they make money some days and lose it all on other days.

This is the reason you must trade Nifty and BankNifty with proper hedging else you will lose more than you will make on bad days. Over all your trading account will be a loss making business.

What Is Volume?

Stocks trade when markets are open. Some stocks are traded less some more. The number of shares that is bought and sold over a given time period is volume. Note that volume can change over given time period.

For example when the PNB Scam news came the next day PNB witnessed more than average volume.

Where to find high volume shares on a particular day in India?

Top 25 – Volume Gainers – Source NSE India

Most Active – Volume – Source Economictimes

Stocks that are witnessing a huge surge in volumes – Source Moneycontrol

Note for people who trade looking at candlestick:

At the bottom of the chart most software will show you volume of the share traded on one candle stick on whatever time-frame you are looking at. For example if you look at daily chart time frame, you will see the number of shares traded each day of a stock. If you switch to the 5 minute chart, you will see the number of shares traded every 5 minutes of a stock. 5 minutes chart is very popular among the intraday day traders.

Volume is mentioned a lot in trading community but people cannot interpret it correctly. Most traders think that volume increase means buy the stock. This is wrong interpretation.

When sellers are more than buyers – the stock will go down.
When buyers are more than sellers – the stock will go up.

In both the above cases volume may increase. So what is the problem? The problem is we cannot know for certain at what time the volume of buyers will increase or the sellers. This is where traders go wrong.

How To Use Volume To Trade Stocks?

Stocks that have suddenly gained momentum have seen a surge in volume. These stocks you can find from the above links. So the hard work is already done for you.

The best momentum stocks have high relative volume.

What is relative volume?

All shares have an average volume trade per day. When a move suddenly it is almost certain that they are trading above their average volume. Stocks will usually trade at above average levels of volume when they open gap up or down. This can be due to a news, announcement, merging, quarterly earnings, dividend declaration and many other factors.

When they become momentum stocks they are trading well above the relative (average) volume. This does not mean that they will go up or down in future.

Look at Reliance Communications chart on 16-May-18 time: 11.19 am – see that volume has increased but stock has fallen 13.31%:

Reliance-Communications-16-05-18

When volume increases the stock may move above or below their daily trading range.

So what is the benefit to a day trader trading momentum stocks?

They can capture big profits if they get the direction right. However they can take a small stop loss.

Trading momentum stocks is good for a intraday trader.

When a stock gaps up or down with more than 3% then you can rest assure that its volume has increased. Some shares will see an increase of volume in first 10-15 minutes then the volume goes down. But for a good trader this time is enough to make good money.

Go With Momentum In First Five or Ten Minutes

When you see a volume surge then you can go with the momentum to trade that stock intraday with strict profit and loss targets. Keep the targets in the system not in your mind.

Here are some articles I have written on stop loss that you can read:

1. Percentage On Margin Blocked Stop Loss Method
2. Using Trailing Stop Loss To Increase Profits
3. Stop Loss Methods

Conclusion

Look at this first trade of a trader who traded option for the first time:

Jaykumar Testimonial 4-May-18. He traded option for the first time in life and made 1.2% return in 10 days – Results may vary for users

Jaykumar sent this Testimonial on WhatsApp for Web. He traded option for the first time in life and made 1.2% return in 10 days – Results may vary for users.

Margin block was approx 95k and he made 1200 so approx returns: 1.26% in 10 days.

Average return comes to more than 3% in 30 days.

This is approx 36% in a year. Ok fine lets take even more conservative approach

30% in a year.

Now think about it – COMPARE YOUR TRADING RETURNS VS 30% A YEAR.

If you are trying to make too much money too fast – it will not happen. You will lose it all. I know lot of other course/tips providers will never tell you this – but I have to be honest and tell what works and what does not work in stock markets.

See what he says:

I would be very grateful whoever join this course – it’s worth it. I lost a lot in market but now, I Am happy I can earn healthy and tension free.

He lost a lot in stock market, now he is making money tension free.

36%? forget that – 30%? forget that too – 25% a year – YES even 25% a year is a good return from hassle free tension free direction-less trading. See what 36% a year can do to your account.

You will make more than 25% a year whatever happens to Nifty.

Enroll for the course here.

Nothing is better than trading WITHOUT STRESS and trading WITH INSURANCE knowing very well that your CAPITAL IS SAFE.

What is Short Selling?

Short selling is selling stocks without have the stocks in demat account. Short selling equities must be closed the same day (intraday) or market makers will close the stock in auction and you will have to accept whatever price market makers get in auction. Usually this results in losses. Therefore short selling should be done intraday only and must traded under (MIS) Margin Intraday Square-off.

Short selling can be done in derivatives (options and futures) if the trader wants to hold the position overnight. But overnight gap up and down comes with huge risk. Overnight losses can exceed 10,000.

Does it mean over night short selling using derivatives is very risky?

Yes it is. Most short sellers lose their short when the stock gaps up the next day. Sometimes the risk management team square the position themselves to manege risk. They are under no obligation to inform the client of an automated close-off if the risk goes beyond a limit.

Does it happens every-time when the position goes in risk?

When shorting a stock in derivative segment, the broker blocks minimum 60k depending on the stock volatility and lot size. What needs to be blocked is decided by a software for each stock. Most brokers block slightly above NSE stipulated rules for derivative trading to remain risk free.

So when the position loses 80% of its value the risk management team calls the client to explain them the situation and warn them that if they lose 10% more they will have no other option but to close the position.

But in some cases the loss is more than 90% of the margin blocked when the stock gaps up the next day, in such cases the broker is in huge risk and has no time to call the client. In such a case the broker or the system closes the position without informing the client.

Do brokers have the right to close the potion without informing the client?

These situations comes rarely when stocks gaps up more than 10%. But yes they have the right as brokers are taking risk on your behalf when you short sell a stock. They are liable to pay the loses to the exchange therefore money is blocked in your account. Its not the brokers who keep the money – when a loss happens the broker will have to settle the amount (MTM) everyday to the exchange on futures trading. Losses/Profits from all their clients account is calculated and settled to keep the accounts up and running.

If one broker defaults then the whole system will collapse. So the broker does not want to get into any kind of danger zone. To avoid this situation they cut the losses. You can say stop-loss being taken by the broker on your behalf.

How To Manage Risk Short Selling Stocks?

Short Sell Stocks With Less Than Expected Earnings

You can read in various websites the market expectation of a company during the result season. You can short sell stocks that declared profits less than market expectation. Chances of winning percentage will be high.

Risk Manage The Leverage When Shorting

Leverage if managed well is not bad, but some people over short sell. This is not good. You cannot get stubborn when short selling. Nothing is guaranteed – just because you think the stock may fall it may not fall. So go as per the expectation. Even if you have the money to leverage more – do not trade more lots than you cannot handle.

If the stock gaps up there is lot to lose, so trade with the lowest amount of leverage or lots.

Keep A Stop Loss When Shorting

This is very important when shorting a stock. You must know how much you are willing to risk. Do not take more risk than what you have decided. Once that limit is reached take a stop loss.

Small losses are ok, but big losses are not. Small loss can allow you to live to fight another day and potentially make a big trade.

Do Not Short Sell A Stock If It is Gapping Down and Hitting The Circuit

Some people short sell stocks that are hitting the lower circuit whenever the trade opens. This can be dangerous. Eager buyers are waiting for trading to resume in such stocks so that they can buy.

Once such a stock bounces back – it keeps hitting the upper circuit. You will not be able to get out of the situation even if you want to. There is a chance that you will lose entire margin blocked for this trade.

Trend of Overall Market is Important

In a bullish market its better not to short sell. The stock may reverse as soon as you sell it. Short sell when the markets are in a down trend.

Hedging Short Sell is Important

Overnight gap up can be dangerous as trader cannot take a stop loss overnight. The only way left is to take a stop loss. But if you hedge your trades losses will be minimized whatever happens and profits will soar.

Hedging is a great way to trade peacefully as hedging ensures that losses are restricted while the profits soar.

You can Learn Hedging and Monthly Income Generating Option and Future Strategies in my course. Fees can be paid here. It is a must do course if you are future and option trader or aspire to be one.

There are two major problems with new traders. These two problems are main reasons why new traders lose money.

See this whatsapp message I got from a new trader:

Reason for new traders losing money

Here is the text:

Hi it’s Abbas . I read your blogs and 5 days email.

I will share my experience. I started share trading in [broker’s name hidden] and lost almost 25k in first 15 days, in Feb 2018.

Then again I lost 15k in this April month in equity in intraday trading in stocks. I have less knowledge of options and futures. But after reading your website blog and option basic knowledge attachments. I have some now.

Even before your email on 23 April I lost 12k to tip advisor. I don’t how they get our numbers and keep calling.

I need your advice and help. I will subscribe to your course after some time as I need a break. And I am learning and practicing trading.

Lets look at the problems of new traders:

Problem no 1: Less Knowledge

Do you think with less knowledge you can excel in any field? Especially in stock markets where your hard earned money is involved it is very risky to enter with less knowledge. Your competitors are HNIs and DIIs. Do you think with less knowledge you will be able to beat them over the long period of time?

Think about it.

Luckily this person has lost only 30k till now. Look at this loss of 40 lakhs, loss of 2 crore and biggest of all 3 crore loss. 🙁 🙁

How can someone go on to lose this much money in greed for making more. I fail to understand this.

Is your story the same as any of the above? With less knowledge there is less than 0.1% chance that you will succeed.

Problem no 2: Tip Advisory Services

Once a new trader is unable to succeed on his own he turns to tip advisors. This is the next blunder. Name one person who became rich trading the stock markets by taking tips. I have written an post on why tips cannot make you rich.

Look at their promises – SMS or calls like we will make you 1 lac daily and the poor retail trader gets trapped. Forget about 1 lac daily. Average retail trader loss due to tip providers exceed 1 lakh. Loss on paying a monthly service to get tips and loss on trading the tips. Do not believe in guaranteed profit promises from the tip providers.

If you try to call them after losses there is no one to pick the phone.

They give 5-6 calls daily. They know very well that non of the service takers will be able to trade all of them. So if someone calls them they can easily say you did not trade all calls, so we are not to blame.

Then you leave their services, someone else joins. 🙁

Its sad but the problem lies with the trader too.

And the problem is this:

NEW AND EXPERIENCED STOCK TRADERS BOTH WANT TO GET RICH VERY FAST WITH EITHER SPECULATION TRADING OR TAKING TIPS.

Let me tell you clearly and honestly that making money in any business takes time. Stock trading is also a business not a magical source of income. And expecting 10% a month from stock markets is also a blunder.

Look at this ROI (Return of Investment) Yearly graph of Berkshire Hathaway:

Berkshire Hathaway Performance

And a note on their Compound Annual Growth Rate (CAGR):

However you analyze it, Berkshire’s long-term performance has been awesome. Using market value, he says, its shares gained 21.6 percent annually compared with 19.4 percent for book value and 9.9 percent for the Standard & Poor’s 500-stock index, with dividends. Using market returns, the shares gained a cumulative 1,826,163 percent since he took control.

Source:
https://www.nytimes.com/2015/03/08/your-money/warren-buffetts-awesome-feat-at-berkshire-hathaway-revisited.html

Read that again just a gain of 21.6 percent annually yet Warren Buffett goes on to become worlds riches man.

Yes its true that he compounded millions of dollars to make billions. But ultimately it was compounding that did its job.

History has it that even 21.6 percent annual gain is great return on investment. But yes this has to be consistent.

What you can do?

Stop speculating and stop taking tips. You can download this PDF file which well explains the basics of options and then you can do my option course to generate wealth over the long period of time trading options very conservatively with proper hedge to restrict your losses.

There are many Psychological Obstacles For Traders. No greed control, no emotions control – trade whenever you feel like trading, itching to trade just to trade and have fun, etc.

All of these are dangerous to your trading account.

You should trade only when an opportunity comes not wherever you feel like or you think so.

A few days back one person called me and said he is losing 94k on a put option. Invested 1 lakh and current value 6k 🙁

When I asked him did you hedge? He said what is hedge?

This is where the problem is – one you trade naked (naked trading is when you trade without hedge), second you trade because you think so a put or a call will increase in value, third there is no risk-management.

For how long will this go? Then why blame the stock markets when you yourself are destroying your wealth through speculative trading?

Trying to make too much money in a small time will NEVER WORK.

But you can make small profits consistently. Its better to make small profits more often than making huge and then losing it all.

If you are one of them who is losing consistently trading options you can do my conservative option course where you will learn how to make small profits consistently every month. Your job is making more money – give your time to your job – and give only 20 minutes a day to stock markets yet create wealth from stock markets.

Here are some Psychological Obstacles which a trader must overcome

Psychological Obstacle 1: Unrealistic Expectations From Stock Markets

New traders and even experienced traders believe that there is some magic pill which if they can crack they can become extremely rich trading derivatives in matter of months. This is simply not true. Yes if done well your CAGR (Compounded Annual Growth Rate) on trading money will be good like 20-30% per year, but it can never get near 100% which most traders especially new traders think.

A lot of people do not do my course for this reason alone – they keep the phone down as soon as I say you can make approx 2-3% a month. This is too less they say and keep the phone.

They keep trying to achieve that 10% per month – some per trade, and lose it all. Then realizing that even 1% a month is a good return. Then they call me back after realizing the facts.

No doubt why 99% of traders lose money and 80% of investors lose money. But those 1% traders make more than those 20% of investors.

It needs real patience and practice to reach that 1% mark of traders who make money, but if done well its possible. For that you have to know your obstacles – come over them, do some research and get some knowledge.

Psychological Obstacle 2: Need For Instant Profits

As soon as a trader gets into a trade the first thing they look is for instant profit. This is not fixed deposit. Hey even fixed deposit has a time limit. If you take your money out before the fixed time you will not be paid the promised percentage.
Then how come you think that as soon as you get into a trade you will profit?

After this two things may happen. Either a small profit or a small loss. When the trader sees a profit he/she immediately books it. But when they see a loss, they sit tight in the hope that the stock will reverse and bless them with money. Stock does not reverse and losses exceeds. When it goes beyond imagination the trader takes a atop loss only to see the stock reversing as soon as they took a stop loss.

INTRADAY DAY TRADING IS ALSO A PERFECT EXAMPLE OF INSTANT GRATIFICATION.

No doubt why intraday trading is very popular. There is nothing wrong in Intraday trading if you are making profit in 8 out of 10 trades. But how many make profits in intraday trading?

Psychological Obstacle 3: No Place For Patience

When it comes to buying a piece of cloth we have a lot of patience. We jump from one mall to another, one shop to another to buy a Rs.500/- shirt/saree, but when it comes to bet Rs.50,000 in trading we do not think twice – it just takes a second to invest.

For some strange reason, other than trading, we show a lot of patience in everything else. 🙁

Patience is the main difference between winning and losing traders.

Jesse Lauriston Livermore said it perfectly: “Money in the stock market is made by sitting (waiting for the profits to come), not trading (every second)”.

Psychological Obstacle 4: Full Of Ego

When we lose money we go for revenge trading. Stock markets has no friends or enemies, it does not know you. So why to show ego to stock markets? When you took a wrong trade it is you who should take the blame, not the stock markets.

Try to master your ego and study your wrong trades – do not show ego/anger to stock markets and increase the lot size by 10 times. You are likely to lose more.

No strategy has a 100% win rate. So when you are wrong take it humbly. But you must make sure to hedge your position so that when wrong the loss should not pinch you. If you have not hedged your position overnight, one loss can wipe out weeks and even months of gains. Hedging positional traders is very important.

If you cannot keep your losses small, I can tell you with guarantee that you will never be able to become a good trader. You will lose all money in your account.

If you have a lot of ego, it is advisable to either hedge your trades or keep a stop loss in the system not in your mind.

Psychological Obstacle 5: Focusing On The Trade Every Second

New traders have a habit of looking at the Mark to market (MTM), and the trade every second. If you have taken a positional trade then there is no need to keep looking at the trade every second. Fluctuation is part of stock markets. If you have set your target and stop loss – come into action only when they get triggered.

Psychological Obstacle 6: Focusing On Every Trade

One good trade and the trader pats himself at the back thinking that he/she is a good trader. Exactly opposite if they see a red day. One or two trades do not define you as a trader. You monthly performance defines it and your yearly ledger confirms it.

Psychological Obstacle 7: Relating One Trade To Another

This is a big Psychological Obstacle. If you just got a profit you will jump into conclusion and take another trade based on the previous trade. Similarly if you had a bad trade you will never copy it.

A new trade is a new trade. All trades are completely independent of each other. Do not try to base one trade to another trade. Your findings and research are more important than the trade itself. If you have done lots of paper trading and seen success then just because the first real trade failed does not makes your research trash.

Psychological Obstacle 8: Fear Based Trading

If you are trading in fear you will never make money. If you are trading in fear it means you are gambling not trading.

Hedging your trades will take the fear out because you will know beforehand that it will restrict losses, and you will be able to trade successfully.

Fear will cause you to take profits too early, but sit back on losses. Hedge will ensure you neither take out profits early nor see huge losses ever.

FOMO (fear of missing out) is also a big Psychological Obstacle. If a trader decided to buy a future of a stock but out of fear did not buy and later sees that the stock actually jumped 10-20%, he/she will surly take the next trade because of FOMO (fear of missing out) – but this time they see a loss.

To take fear out learn to hedge, respect your stop loss and do not take huge risk initially until you start seeing profits.

Do Not Trade Without Hedge

If you are a future and option trader you must learn hedging to restrict huge losses overnight. You can do my conservative option course and learn properly hedged strategies to make consistent monthly income. These strategies can be traded in Nifty, Bank Nifty or Stocks. You can see testimonials here and enroll for the course here.