Most of the aspiring traders often fall prey to two irrational beliefs – Prediction and Perfection. The wrong Idea that to be a good trader you need to accurately predict the markets or you need to find a perfect trading opportunity is a complete delusion. It often leads to inconsistent results in trading.
This type of Mindset can result in serious trading errors such as lack of confidence, under trading, over analyzing etc. It’s necessary for a Trader to have a proper knowledge, but at the same time it’s important not to overthink or make mistakes that can hinder your trading performance. Looking for a perfect trading setup or trying to accurately predict the Market Movement is a foolish endeavor for a trader.
Unfortunately, the entire subject of Technical Analysis is misapplied for making accurate predictions and showcasing perfect trading examples. Maybe it could be important for an Analyst to make accurate forecast or write perfect research reports, but trading is a different ball game altogether. For a serious trader, prediction and perfection are like enemies.
To get an Idea of what I am talking about, take a look at the Price action of 1D chart in Tata Steel.
2 Important Trading Lessons from 1D Chart of Tata Steel
In the past, you can witness the failure of several Bottom Predictions and Perfect trading setups. The recent bottom was unexpected for many market participants and also it was not perfect, but it did end up becoming successful! Two most important lessons we can learn from this chart are, don’t predict and don’t look for perfection in Trading!
But Isn’t Successful trading depends on making best Predictions? Well it’s not!
It’s a misnomer and fallacious to think that successful trading depends on making best predictions. Just like I pointed out before, it’s a false perception which exists in the field of Technical Analysis. Many aspiring and intermediate traders think in that way due to a lack of experience. To be honest, Successful Trading is all about having a Proper Trading process and Risk Management.
Take the words of the legendary trader George Soros– It’s about how much you lose when you’re wrong and how much you gain when you’re right. To put it in simple terms, it’s about having a proper trading approach that helps to cut the losing trades and capitalize on the winning trades. Having a proper risk management that helps to survive in the ups and downs of Market Volatility.
Overall, Successful Trading is a Process and Becoming a Successful Trader is a Journey. Putting so much emphasis on making Predictions and finding Perfection can distract the path.
