Why Your Stock Trading Strategy Does Not Work?
In my 10+ years training experience I observed that this is most asked question from traders, in this section we will see the answer, why your stock trading strategy doesn’t work-
1. Strategy Switching –
Majority of traders switch their trading strategy in very short span of time without knowing about real fact or knowledge about strategy. They actually don’t know what they are doing; they don’t have a solid trading setup or plan. They just try to find out perfect trading strategy with multiple combinations of technical parameters and after trying a trading strategy, most of the new traders switch to a new strategy. This endless journey blows your trading account.
Do not switch your trading strategy frequently; prepare your strategy with full of knowledge about technical analysis & price action. Do not consider any technical analysis tool / indicator & chart pattern without knowing full details about it. If you are new in stock market so you can take help from any expert trader or a trading mentor. Always remember “Trial and Error is an Expensive way to Learn” so I highly recommend you to take help from a trading mentor, who can help you through the process of understanding the market & help you narrow your focus towards the market.
2. Lack of knowledge -
One of very dangerous reason, Lack of knowledge. Many traders even don’t’ know why they have taken position in particular stock, they don’t have any specific reason why they have bought or why they have sold, in most of the cases they are dependent on third party like tips provider, news paper etc.
If you don’t have any specific, strong & logical reason behind your every trade that means you are gambler. Due to less knowledge no one can settle their trading strategy in stock market.
Don’t come into stock market with poor knowledge, educate yourself about investing, and learn how to invest. Stock market is not a experimental place with your hard earned money. It’s a serious business.
3. Ignorance of Market structure -
A trader should understand the overall market structure to implement any strategy. Sometimes traders analyze their trading strategy with fixed result. Eg: they want fixed risk to reward from their trading strategy but if market is in strong impulsive trend or if is in sideways or range bound then they get different result than expectation.
First understand the context of market, identify trend, movement & volatility of stocks then apply your trading strategy and take action as per market situation.
Always remember market never follows you, you have to follow the market.
4. No accountability-
Majority of traders don’t maintain track record of their trades this is biggest reason to strategy switching. Until you do deep observation about your every trade you cannot analyze the accurate result of your trading strategy.
Maintain every record of your trade which is based on your trading strategy & observe that, by keen observation you can identify that your trade setup is profitable or not. Do enough practice in a demo account before proceeding the live trading.