First and foremost, Zebu wishes you an extremely happy and prosperous Diwali! The Festival of Lights signifies good conquering evil and the celebration of a new life. A new life which comes after the mind is illuminated and enlightened. In a sense, the battle is more of an inward than an outward phenomenon. Everything we know about the great battle between Lord Krishna and Narakasura, could be extrapolated to our own lives, where the evil Narakasura represents anything vile or negative in our minds.
For the uninitiated, Hindu mythologies are filled with stories of devas and Asuras fighting the ultimate battle of good versus evil. One such compelling battle which gave us Diwali, is the one fought between Narakasura, the son of Varaaha (the third avatar of Lord Vishnu), and Lord Krishna (the eighth avatar of Lord Vishnu). In general, all Asuras exhibit similar characteristic features like anger, envy and greed. But if we were to introspect, all of us are guilty of feeling these emotions. In fact, it is impossible for a person to not let these emotions get the better of him/her once in a while.
It is crucial for our professional success to keep these emotions at bay – more so for a day trader! While it is near impossible for us to be completely free of emotions while trading, there are some cases where such emotions can break our trading career entirely. And just like how Lord Krishna managed to vanquish the demon, it is time for us to do some soul searching and kill our own negative emotions.
It is the mother of all negative emotions. Like any other entrepreneurial journey, it could be a while before you taste success. And there could be several factors which could affect your morale during that time. In India, we have an innate tendency to compare our lives with others. And once we give into the behaviour of comparing our income or success with others or even our trading style with others, our emotional support system could be wrecked.
It is extremely easy for traders to get caught up with profitable trades and overtrade, hoping for more profits. But more often than not, this plan can turn south and diminish your profits and in some cases, even reduce your capital. It is unwise to indulge in overtrading unless and until your scripts satisfy your strategy’s entry conditions.
The minute we make a few losing trades continuously and are unable to bear our system’s drawdown, we are crippled by fear. As much as it is understandable, it is important to be in a position to shrug it off and improve the risk management strategies of your system. If you are starting out as a beginner, it is also recommended to not quit your job unless and until you have enough monetary backup to withstand multiple drawdowns. When you backtest your strategy, you will get an approximate drawdown value which you should be able to handle before you become a full-time.
Markets are sometimes unpredictable. It is important that we don’t let that make us unpredictable too. Taking rash decisions like not respecting the stoploss of your system and adding in more capital when it is unnecessary can financially cripple you as you make more losses. Try not to let the winds of unpredictability get to you. Ensure that your trading system is intuitive and can manage to stay profitable irrespective of the market’s phase.
Losses are an inevitable part of a trader’s life. While the same holds true for any business, the effects of losses seem amplified for a trader due to the direct underlying asset which is money. When you are faced with multiple losing trades, take a step back, insulate yourself against the losses and keep trading till your system becomes profitable again. Do not give up on trading as a career. If you handle your losses systematically enough, you will be able to get back on your feet in no time.
As a trader, you could often be tempted to make changes to your strategy even when you are in the middle of an open trade. We strongly advise you not to give in to that temptation as anything can happen in the direction of the market. If you have a well-established risk management system and a profit-taking system, it would be better for you to follow the rules to the T instead of trading on impulse or intuition. However, if you feel that you could refine your strategy, do so after you have closed all the trades and backtest the strategy before deploying it.
So, How do we Kill the Asura?
Now that we have covered what makes a trader’s inner asura, how can we destroy him? We simply do what Lord Krishna did!
Work with sincere intent, follow it up with diligent actions and take the smart and right decisions. To do these, you first need to equip yourself with weapons like ‘thorough knowledge of the market’ and teach yourself ‘discipline’. Then, the only thing to do is to have faith in yourself and face your challenges head-on. Happy trading!