Among a host of questions that bother nearly every new trader is how many trades they should make every month. While, in general, the question might not seem as important as others, it is, however, quite crucial if you’re looking to hit the chords with complete precision; or in a more subtle terms, if you’re looking to optimize the return from your every trade. After all, contrary to what the self-claimed “experts” and your ego may tell you, over-trading is never good and is an ingredient to poor return.
Out of many popular advices experienced stock traders give to rookies, “be proactive” is one of the top ones. While given with all the noble intentions, many people interpret it in a slight different way. Result? They end up making big trading blunders, struggling to make decent return from their investment.
Tomorrow I will invest some of my savings in the stock market and by next week it will double. I’ll reinvest the profit and do the same in the following week until it makes me a million.
As flattering and popular as that “goal” is, it blurs with dream and wish. Unrealistic with no definiteness, needless to say, it would fail to transition itself in good outcome.
“Hustle”- that’s the first thing expert teaches the new traders. It’s one of many glamorous terms and rules on the trading scene. Sadly, while as powerful as that instruction is, only a handful of people really manage to hustle in the stock market. These are the successful traders whose stories we read to keep us inspired. The rest… they struggle with a meager return from their investment. They are the victims of Analysis Paralysis.
Are the investment markers cyclical or random? The debate and discussions have gone on for long, and there are supporters for both – with each camp claiming about having evidence to support their belief. Random walk proponents feel that the markets tread an efficient path in which a statistical edge cannot be provided by any type of analysis. On the other hand, technical and fundamental analysts suppose that the markets have a specific rhythm that can be uncovered by careful analysis, offering a small amount of advantage at least.