Topic : How to manage Risk/Losses

INTRODUCTION :

In stock market there are 4 players

 Retailers
 DII
 PRO
 FII

DII is the investor..

FII is the Master trader who trades in all segments..

Pro is the swing trader...

Retailers confused trader

Here we will talk about

the trading style of FII/PRO/DII v/s Retailers..

Market moves in wave patterns.

Where number of small waves given by PRO
& than suddenly big wave like tsunami given
when PRO joins with FII/DII.

All these players do very very very intense research

before entering into a trade..
Their research are not only technical or chart based but
also covers the current and future domestic and global
events and their outcome.

Small waves given to make Retail trader comfortable &

big waves given to trap them.
Whatever profit gain to Retail traders in small wave
are taken away in one shot by big wave..

Big players spends lot of money on research & ground work

for these they have core team of master mind professionals..
Their networking is very very strong
from companies to politics to research analyst.
So retail trader has to be very very cautious and well prepared
if it trades against the trend set by big players..
There are number of reasons that retail trader gets trapped..
Today we will try to understand the reasons..
 Greed to make money fast and in easy way
 Trading taken as part time business
 Looking for tips
 Trading on rumours / news
 Following news channels / Analysts / tip providers who are not at all hard core traders
 Lack of technical analysis
 Never spends money on taking proper training / Learning
 Not spending regularly time for research or home work in post market hours
 Trades against the trend set by Master/Professional traders
 Always Looks and thinks about 1or2 directional trades taken up..
 Dont have habit to watch regularly index option chain and its open interests changes
 Insufficient capital
 Lack of visualization
 PART 2
In part 1 , we have seen reasons for getting trapped by big players..
One thing should be clear in Retail traders mind that they are
playing against Master/Pro Traders. So they have to work hard..
There is no other option than HARD WORK.
 Learn Basic Technical analysis & chart based knowledge. It is
must.
 Follow the Master / PRO traders trend and their trading style.
Try to understand why they are bearish or bullish in the
market.
 Lean to read open interest data & option chain.
 Try to look at the market in totality that is find out overall
trend of the market.
 Try to find out the trend of the sector of which the stocks you
want to trade belongs.
 Regularly spend 2-3hrs for research in post market hrs.. &
4to6 hrs on Sundays for research.
 TRY TO FOLLOW HARD CORE TRADERS instead of tip
providers/channel analyst who are not traders.
 Visualization is the must.. visualize that you are breaking the
records of your highest day profit everytime.
 Try to trade with diversification across the segments
 Try to develop your own strategies/style for trading with
which you feel more comfortable and confident.. Try to spend
more time for INVENTIG this,,
 You have to fight your own against Psychological attributes
like greed, fear, impatience , overconfidence etc... As these
are present in our other day to day life activities too..
 Trading with diversification needs sufficient trading capital..