A Man’s Game
Take no offense when I say A Man’s Game. I intend no disrespect towards those millions of successful women traders. You will understand my point as you keep reading.
The percentage of women is higher among institutional traders, employees of banks, trading firms and so on. Women as traders are more successful than men. But very few women trade in the stock markets but those who do it seriously are more successful than men.
Trading is similar to such thrilling and dangerous sports like sky-diving, rock-climbing or scuba diving. They also attract mostly men. A very low percentage of these sports attract women.
Men are drawn to risky sports in our increasingly regulated society. When work becomes more and more routine, we turn to something recreational and more thrilling to get sense of self accomplishment. More the thrill, excitement, adventurous from our daily routine, the more attracted men get to it. Trading gives the trills of gambling, sex or addiction as people say.
These sports provide intense pleasure but have a stigma of danger because many participants ignore the risks involved and take thoughtless chances. The more experienced the player, the greater risks they take and so the risk of loss or death is higher.
If you want to enjoy risky sports, you need to follow the safety rules. When you reduce risks, you gain an added sense of accomplishment and control. The same goes for trading.
You can succeed in trading only if you handle it as a serious intellectual pursuit. Emotional trading is lethal. To help ensure success, practise defensive money management. A good trader watches his capital as carefully as a professional scuba diver watches his air supply.
There are some important factors which needs to be taken care if you want to become a serious trader. You need to understand the market psychology, analyse the market, build your own trading system and learn to manage your money.
You need to control your emotions. You need to understand the crowd psychology of the markets. Mass behavior is very old and if you understand how they behave, you can benefit from their mood swings and avoid being swept away in their emotions.
The most important of all is the market analysis. You can do this through Technical Analysis. Technical Analysis is picture of crowd behavior over a period of time. Like we say that history repeats itself, so does the human behavior.
Modern methods of computerized technical analysis, provide deeper psychological insight into mass behavior. Trend following indicators help identifying market trends and oscillators show when trends are ready to reverse.
Learning and using these technical tools helps you negate or at least minimize the risks just like the safety measures in high risk games.
We will learn about how to use these tools to profit from the markets in the posts ahead.