Regardless of how confident a trader is in their ability to forecast the future, how strong their conviction, or how much they believe. No individual trader or investor can control the outcome of a market move unless they have sufficient capital to move the market themselves. Traders face a unique frustration found in a few other occupations: a lack of control over the outcome.
A trader has no control over:
- The movement of the price.
- The result of a trade.
Once a trader enters a market, price movement is determined by the collective actions of market participants who are buying, selling, or holding, rather than their own beliefs, hopes, and opinions. While a trader can manage a trade through size and exit strategies. They have no control over whether their stop loss will trigger, resulting in a loss, or their profit target will reach, resulting in a profit. A trader is completely dependent on the market to determine the outcome of each of their trades.
The good news is that a trader retains considerable control. There are some things that can be conroled in Day Trading .
A trader has the ability to exert control over:
- When they engage in trade.
- When they do not trade at all and instead maintain a cash balance.
- A trader can create their own watchlist and decide which markets to trade.
- The price at which they exit in order to stop a loss.
- The price at which they intend to exit in order to lock in a gain.
- To employ a trailing stop loss in order to allow a winner to run.
- A trade’s position sizing.
- Utilize a combination of position sizing and a stop loss to manage a maximum loss.
- The technical indicators that should be used to generate signals.
- How to control emotions.
- Each trade teaches you valuable lessons.
- Whether to continue trading or to give up.
You cannot control the market’s price action, but you can control how you react to it and how each trade plays out after entry. Before you enter a trade, you have complete control over the size and timing of your entry. Once inside, you have complete control over when and how you exit. While you will never have complete control over the markets, you can develop the discipline necessary to have complete control over yourself.
Also, Read : The 6 Most Expensive Trading Habits of New Traders