Are You a Trader or a Forensic Expert?
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The Nifty had a correction of 400 points from the high today, triggering a wave of reactions across social media platforms. The online financial community is immersed in discussions about overbought breadth, overbought Relative Strength Index (RSI), and various other technical indicators that enthusiasts believe shed light on the market's health.
Is it necessary to find the reason for every move that happens in the stock market?
Some argue that understanding the cause behind market movements is crucial, while others assert that successful trading is about anticipating moves rather than playing detective after the fact.If I ask you, "Are you a Trader or a Forensic expert?" - What is your answer...
The Trader's Approach:
For a trader, success lies in making informed decisions based on analysis and strategy before market moves unfold. Traders must set predefined levels, establish entry and exit points, and employ technical and fundamental analysis to anticipate future price actions.The trader's mindset revolves around proactive decision-making. Before executing a trade, a trader formulates a hypothesis based on market trends, economic indicators, and other relevant factors. The emphasis is on staying ahead of the curve and making strategic moves that align with a well-thought-out plan. Traders thrive on disciplined execution and risk management, minimizing the need to find the reason behind every market swing.
The Forensic Expert's Perspective:
On the other hand, a forensic expert in the stock market is someone who deep dives into the reasons behind price movements after they occur. This retrospective analysis involves scrutinizing news, financial reports, geopolitical events, and other factors that may have influenced the market. While understanding the root causes of past movements can provide valuable insights, it may not be the primary focus of a trader.They aim to decipher the narrative of the market, unravelling the mysteries left behind by past events. This approach can be informative but may not be as actionable for those seeking to trade in real-time actively.
The Balance between Trading and Forensic Expertise:
In reality, successful market participants may incorporate trading and forensic expertise elements. While traders focus on proactive decision-making, understanding the broader market context and the reasons behind historical movements can enhance their overall market awareness.The key lies in finding a balance that aligns with individual goals and preferences. Traders may incorporate forensic analysis elements into their strategy to better understand market dynamics. Likewise, forensic experts may adopt a more forward-looking approach to complement their retrospective analysis.
Whether you consider yourself a trader or a forensic expert, the stock market offers a diverse playground for those seeking to navigate its complexities. While traders prioritise anticipating moves based on proactive analysis, forensic experts uncover the reasons behind market actions after the fact. Ultimately, the ideal approach may involve a blend of both perspectives, striking a balance that enhances one's ability to navigate the ever-evolving landscape of the stock market.
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Good one Sir
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@Pramathesh Shrivastav Thanks Pramatheshji
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There is absolutely no need to interrogate the market moves. This only provides unnecessary information to your mind and creates noise. Shadow PnL drives this. It is very harmful for a trader as it forces them to exit early or switch to other strategies, etc.Market rewards you during all three phases bullish bearish and sideways if u trade in FNO. For cash, the reward is only for bullish momentum. One should switch the roles according to the market phase. He/she won't face a problem despite whatever moves happen in market. Or one can simply participate when the particular phase is in motion as per his bias/strategy and sit outside during other phases. And there is no breakout with a retracement
once you arebin the trade, you should only focus on the Stop-loss or pyramiding. -
@Ravi Shinde Well said sir.
