Trading & Taking Breaks.

As Sir says, “Markets are stressful. No matter how cool and calm we try to be, the nature of the work does cause stress.”

It is here that taking breaks becomes immensely important. Some breaks are chosen by us, like going on a vacation. While others are by compulsion, like being down with viral fever 😉 (I was down with Viral before 2 weeks, while Sir was down with the same last week!)

Both types of breaks can, if we choose to, reward us with something noted here, as per my insights:

1.Help us de-stress
2.Help us take time out and think, and re-focus on the primary goal
3.Help us break the constant materialistic pulling force which just increases every passing minute.

I observed one more thing:
On taking breaks, i get re-connected to what exists, what matters.

While we are in the markets, in our routine, we can’t think clearly regarding realigning ourselves with our set system or strategy. At times, we can’t even make out if we need realignment in the first place. A break, even for some hours or a couple of days, completely from our routine, physically as well as mentally, should serve a healty purpose there. After all, we trade to make money even with a few correct confident trades, and not to punch unnecessary wrong trades.

Risk Management: Guard of Your Account

It is famous and true in market that “Never use money for trading which you can`t afford to loose”. It is almost like managing risks of your trading. It is necessary, otherwise there will be no future of our trading.

Risk management is managing our risk of loss from a particular trade or trades. It allows a trader to limit losses while trading, that trader could suffer a loss at particular level, which is set by him or her. It is always good to find depth of water before entering in river.

But how much risk should we take in trading? Well, it all depends on traders psychology, trading sector and method of trading. For example, trading in index is less risky because the movement of up and down in indexes is slower. While entering in equities is a little bit more risky then index, and entering in options trading is highly risky.

I does not mean that high risk trading is a trap or we should avoid it. My motive is we should educates ourselves properly before taking a trade, that how much risk is in it. Few points which should be consider in risk management:-

(1) Your stop loss and trade stop loss must match with each other. For example if a pattern stop loss is 3% and you can`t afford to loose more than 2%, then either match both of them or do not take trade.

(2) Always check, at what point market will prove you wrong, how could be you wrong and how much it can effect your capital.