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How to control emotions and trade in market

How to control emotions and trade in market?

In Simple words how does market work?

“Market is all about Supply and Demand, it is what drives the market that is prices up and down”

Now why do people fail in trading the stock market?

People have emotions like fear and greed which is what makes humans make mistakes in live market.

  1. FOMO- Fear of missing out. It is a feeling that he may not a position in current trend where a trader makes mistake like entering too late making his stop loss very huge compared to reward where the stop losses are taken.
  2. Greed- A trader can be awaiting for big profits while not booking the current profits at hand due to greed and later end up in losses.

So do the traders who succeed have any special tools or indicators which make them successful?

Yes and no both in a way.

Yes part of answer – A smart trader will analyse the market sentiment using various tools which in turn use Open interest etc for market sentiment analysis.

No part of answer – A smart trader analysis simple things like supply and demand. They take positions from supply zone and demand zone. They do not need any special indicators or anything but pure price action and rejection zones like supply and demand.

Options trading can be little complicated. Options have greeks like theta(time decay), delta(rate at which option price changes with respect to change in price changes), gamma, rho.

Recent Sebi survey says 9 out of 10 people lose money in FNO segment, why is that?

This is because of fact that options trading by default have a edge to sellers where they can have the theta/time decay in their favour.

So does that mean Option buyers can not make money?

Option buyers do make money but not many of them. For option buyers, its all about timing. They need to take a snipper entry  to make the money. The stop loss is the king of the market. One who does not have respect for stop loss can not survive the market. Some people prefer hedging of options instead of stop loss which is also good.

Now comes to conclusion- How to control emotions and trade in market?

I know its not as simple as one can say but think of trading as a business and only think of stop loss as investment and reward as profits. Do not bring any emotions and keep a 3-4 trade rule to control emotions and over trading. Every day start fresh.