InvestorQ : Can you give me a guide book on how I as a trader can focus only on the present?
priya Shah made post

Can you give me a guide book on how I as a trader can focus only on the present?

Dilmini Mercia answered.
3 years ago

More than a guidebook, you need reasons as to why it is so important to focus on the present. The trader focuses extensively on the real data and not on expectations. That means, accept the market as the most credible source of information. After all, the market represents the collective wisdom and the collective stupidity of millions of investors across the world. It is surely more representative of the market reality than what you believe is going to happen. If you start being a forecaster, you stop being a trader.

Focus on interpreting trends and what it means to your positions. When you see a breakout, ask what the extent of the break out will be. When you find a stock taking support consistently, try asking yourself if the support base is credible or if it is giving you a false illusion of support.

Focus on how the stock reacts to news and other cues. You surely do not want to trade a stock that hardly moves. A stock like NTPC is a classic example. It is hard to recollect the last time the stock moved sharply with a lot of volatility. It is hard to trade a stock when it does not react to cues and external stimuli. You obviously want a stock that reacts; and reacts in a predictable way.

Don’t get into the media task of trying to project everything. Focus on what the company has announced rather than what it is going to announce. If a company like Hindustan Unilever announces a structural shift in the quarterly results, then take a view on whether the impact will limited to a day or will continue for longer time. Adopt your buy-on-dips strategy accordingly.

Never lose your perspective. When you are investing, your focus is entirely on finding the right stock for the long term edge. You are now worried about time or capital. As a trader you are worried about time and capital. Hence you must calibrate your trades accordingly and focus purely on the present; not so much on the future.