We all want to be good traders and earn decent money, just sitting in front of the computer. But the question is, how to become a good trader. There are many tutorials, suggestions and many more useful videos on the internet. And more than everything you need to possess or particular expertise skills to become a good trader.
To become a great trader and successful trader, there are two important parts to consider and master. So, to become successful, you have to master the inner game and learn the outside game. When we learn both these parts and get the intersection, we achieve success, and it becomes the path.
When we consider the outside game, there are two essential points that one should consider becoming a great and successful trader. Let us see what the three essential parts of the outer game are.
Entry is the critical aspect of stock trading. The key point here is the time. It is always important to wait and make an entry at the right time. For example, when the price of the stock, in the other terms, the profit of the company is declining, it is not ideally the right time to catch up the stock or make the entry. Picking the shares that are decreasing the value is just like grabbing the knife that is falling. So, be very sure about the right time that you make an entry into the trading of the stock of a particular company. So, the entry becomes a very critical part of your success in the stock trading.
Management does not mean the management of the stocks alone in the trading of the stock. You should possess excellent managerial skills, money management, trade management and risk management. You should consistently see the history of how the stock was fluctuating in the past and based on that you can come to the individual interpretation of how the future position of the stock will be. The best example is chess. Management here is like playing chess. We should think about how the consequences and dynamics will after ten steps ahead. Similarly, it is essential to anticipate, what if the stock value increases to this value, what if the stock value is decreased to this value, etc. The decisions that you make must be based on many calculations.
The exit is another important aspect. Every investor invests in the stocks to trade, but not as depositing the money in the bank to retain the stock for ten years, 20 years, 30 years together. Some of the other time, one has to exit from the stock, by selling off the shares that you own and capitalize money from the shares. Exiting is closing up the trade with good close with a real rise of the price of low end with the decline in the value of the share.
Once again, to become a good trader, you need to be very calculative for both the entry and exit and the management skills are important right before the entry to the point of exit.