InvestorQ : How can we apply mental capital in real time trading and investing?
Suhani Mirza made post

How can we apply mental capital in real time trading and investing?

seema Upadhyaya answered.
3 years ago

A successful trader used to proudly announce that he followed only two rules in trading. Firstly, always buy into strength and sell into weakness. If you think that was simple, try applying it. Secondly, minor corrections against major trends call you to add to your position. But weakening or slackening of a major trend is a sure-shot sign to exit the position. This strategy had hardly failed him while trading India over the past 10 years. That is not a guarantee that you will always get it right but adhering to this kind of discipline calls for a lot of mental capital. That is what counts.

As a trader or an investor you are always exposed to a plethora of emotions; greed for the big trade, fear of reversals, frustration over missed opportunities, regret over bad decisions and panic over volatility. That is exactly the situation where your mental capital gets tested to the hilt. Keep it simple. Developing and nurturing your mental capital is really not all that difficult. Follow some basic steps to develop your mental capital. Listen to the market; stick to your trading rule book as far as possible; focus on what is working for you and learn to stay off when you don’t understand a thing. In the short term, a lot of factors can work in your favour or work against you. In the long run, it is only your mental capital that will most certainly see you through.