InvestorQ : How exactly does a mercenary operate in the stock markets?
rhea Babu made post

How exactly does a mercenary operate in the stock markets?

ishika Banerjee answered.
3 years ago

A mercenary believes that you must first pillage then burn. It is OK to realize that your strategy is going wrong and make a U-turn. But just changing tack does not make a successful trader. Like a mercenary, he has to first pillage. See what best capital you can extract from a situation before changing tack. Even in a graceful exit you must choose the most profitable way.

One of the basic rules of a mercenary is that a sergeant in motion always outruns another not in motion. That is true of markets. It is ok to occasionally be on the sidelines. But a real hard boiled trader always has to look for opportunities and stay in the race. Keep trying out new ideas and keep changing tack if they don’t seem to work. Stupor is hardly golden in trading. In fact, the smart trader shakes up the stupor as we shall see in the next point.

A mercenary is never afraid to be the first to shake up the stupor. Like a mercenary, a trader should be purely driven by the profit motive. It does not matter if, in doing so, you go against the crowd and earn popular condemnation. There are times a mercenary trader needs to take the explorer’s risk.

This is typical war parlance. Sometimes the only way out of a mess is through the mess. That is a great lesson for traders. Traders who lost money in the crash of 2008, just waited out. The smarter guys jumped into the mess and decided to short the market. Not only did they make money, but also made a pile to go long later. You need not burn your fingers in the trade. But where you see opportunities, you must jump and make your presence felt.

No strategy is as great as the profit the strategy generates. A mercenary believes that at the end of the day you will be judged by the amount of money you make. Whether you change tack or you refuse to change tack; that is what matters. That should be your only criteria to assess yourself.

Finally, the longer everything goes as per plan, the bigger the impending disaster. This is one of the most important lessons from a mercenary. And it is equally true in stock markets too. The law of averages always tends to catch up with you. The better you are prepared for it, the less the pain. As they always say in the stock markets, that if something is too good to be true then it is probably not true.