In this blog, I reveal one lesson which I learnt from the market hard way and I don't want you to get trapped in THIS mindset...

Wed Sep 8, 2021

I started trading back in 2005 but professionally from 2010.
During the 10 year journey, I have made thousands of trades and made ample of mistakes and learnt from them as well...
Here I reveal one such lesson which I learnt from the market hard way and I don't want you to get trapped in THIS mindset...
"Learn from the mistakes of others. You can't live long enough to make them all yourself"-Eleanor Roosevelt
After my MBA, I worked as Equity Advisor (Dealer) in one of the broking firms. There we used to churn clients to trade in Nifty futures. Intraday trading with small profits of 10 to 15 points.
What it did was it trained my mind to take small profit. I could never think of taking 20 points or 25 points in Nifty because I was accustomed of taking small profits.
That created problem when I started to trade in my own account. Whenever profits passed 20 points, it clicked alarm in my mind to book profit. It became hindrance in taking big profits and my brokerage and taxes ate majority of my profits.
Then slowly, I started to change the habit and started taking 60 points then 80 points then 100 points on Nifty...But still I thought 120-150 points profit on Nifty in one trade is pretty huge and market will reverse after giving such a big move in one direction (since I am a trend follower, I benefitted largely when market trended in one direction).
Then I started taking big profits in 120-150 range...and now that range became my profit targets...There was one trade where I booked almost 150 points and Nifty rallied 450 points in my trade direction...Had I hold on to that trade, I would have benefited largely (because I was doing pyramiding and such big rallies come very rare)...I would have doubled my capital in just a matter of few weeks...
There I learnt that there is nothing called as overbought/oversold in market...Market can keep going up even if it has gone up substantially in past and market can keep falling even if it has fallen largely in past...
No price point is expensive/cheap at any point of time...
It was only through trading system, strict discipline and money management that I could come out of 'Cut Your Profits Short' and 'You Cant Go Broke Taking Profits' syndrome and there were times I took 600 points profit on Nifty in single trade, 1500 point profit in Crude Oil and 23000 profit in Silver.
So I learnt hard way a lesson to 'Let your profits run...' which I might have read hundred times before that...
What are your views? Pl comment below...

Dr. Abhijeet Birari
Expert, Trader, Trainer

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