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Trader Alok Khadaroo provides some valuable tips he picked up on his journey from extracting teeth to extracting profits through trading
I have not always been a full-time trader. In fact I studied dentistry and practised as a dental surgeon for 15 years before changing careers. While I was a practising dental surgeon, I studied the financial markets and based on what I learnt, I traded the markets on a part-time basis.
The part-time studying had its rewards and culminated in my obtaining an internationally recognised qualification in Technical Analysis – the CFTe (Certified Financial Technician). Besides trading my own account, I have also developed my own training programme to mentor individuals and employees of companies.
The path I have chosen is not an easy one – indeed it is quite the opposite. It is challenging, requiring the correct psychological zone at all times, a positive mindset, where one needs to divorce oneself from emotions. Unlike the many unscrupulous gimmicks you hear of, I know that trading is certainly not a quick way to make money. Indeed, if it was actually so easy, then why aren’t there more multibillionaires? The truth is that it is hard work – like any other business – and if a person is committed and willing to put in the time and effort, the rewards are there to reap.
Unlike the many unscrupulous gimmicks you hear of, I know that trading is certainly not a quick way to make money. Indeed, if it was actually so easy, then why aren’t there more multibillionaires? The truth is that it is hard work.
A personalised trading plan is a must. Everyone has different requirements and different personalities, so the trading plan that you choose must be tailored to suit you. The plan must take into account your personality, lifestyle, work commitments, knowledge, skills, family commitments, social circle and access to trading capital. There is no generic trading plan. It was only when my trading plan was completed and my trading became more rewarding than my private dental practice that I made trading a fulltime endeavour. This is a long and slow process requiring patience. Trading is also not for everyone.
Lesson learned: how to handle losses
Aside from employing strict risk management strategies, one of the most crucial and often overlooked areas of successful trading is maintaining a healthy psychological outlook. This is especially so after taking a loss, or after a series of losses.
The fundamental reason why traders are unable to take a loss is because they become emotionally attached to a trade. So you need to divorce yourself from emotions. Fear and greed are the strongest emotions felt, but if you comply diligently with your trading plan’s rules, then you’ll be successful.
Chopping and changing strategies by listening to too many people’s opinions after a series of losses only exacerbates the losses and leads to frustration.
A predetermined stop loss is a mandatory requirement for capital preservation and successful money management. Before I enter a trade, I work out the estimated Rand amount loss and make a conscious decision that I am comfortable with the loss. A stop loss also takes away the emotional second-guessing that one can succumb to ‒ the inevitable thoughts of: “Should I close the position or wait to see if maybe it will turn around?”
Finally, know when to take a break from trading ‒ “Not taking a position is taking a position.” In the midst of a losing streak or extreme market volatility as we have recently seen, consider taking a break. Accept that not every trade is a winner. All successful traders have at some point in time had a series of successive losses – I know I have. It’s how to come out of all those losses unfazed that separates the wheat from the chaff.
I find that walking away from the computer after two successive losses works for me. I also take frequent breaks to clear the mind and re-energise for the next market opportunity.
I hope this story has inspired you to achieve your trading success.