In my previous post: Creating a Trading Plan (Beginner - Expert) Part I I have discussed how to create a trading plan. Well, maybe you are a critical person and then ask again:
"That means that with a trading plan and following it, it guarantees that I can immediately make big profits, don't you?"
If you ask like that, I will honestly answer as it is: Not really....
I always tell you, especially through the writings that I write in this web post, don't have too high hopes to get as big a profit as possible from the stock market. Making a profit from the stock market is not easy. Therefore, to get around this and to break the repetitive cycle of market psychology, you must be disciplined and consistent in carrying out your trading plan. When you can run a trading plan consistently, profits will also follow consistently. Read the post: Main Mistakes of Trading: For Money.
Pay attention to the keywords of the words I bolded: CONSISTENT. So, the FIRST goal when you make a trading plan is to make it so that you can PROFIT CONSISTENTLY and can reduce your losses CONSISTENTLY as well. Consistent profit does not mean big and spectacular profit!
Wow, does that mean I can't make big profits if I already have a trading plan?
I mean it's not like that. Now I give you 2 choices:
1. 25 times your stock transaction resulted in 18 profits and 7 cut losses but your profit is very consistent even though it is small and your cut loss is twice as small as your cash. Total: you cuan
2. You have made a profit of Rp. 10,000,000 in 2 transactions, but in the next 5 transactions, you have lost Rp. 10,000,000. Total: break event points (BEP).
Which one do you choose? According to the science of consistency, the number 1 choice should be better.
Why do you need consistent profits first? Because in the stock market you will not be easy to make a profit. As in my experience, the first 6 months of stock trading, I was able to get a large amount of money, after that only 2 of my transactions, could cause a loss of as much as the money I earned in the first 6 months. How could it happen like that? Because I don't have a trading plan.
So you need to know, if you don't have a trading plan, the impact will be very dangerous for the capital you invest in stocks. In fact, there are lots of beginners who just want big profits in an instant without having a trading plan. Lots of people are trapped in the lure that stock trading is easy without exposing the risks and importance of a trading plan. And believe me you will not profit but instead stumped..
With a trading plan, it doesn't mean you can't make big profits from the stock market. Full time traders can definitely get big profits from stocks? How can that be? Of course, because these full-timers only fulfill their daily needs from stocks, it is certain that full-timers can and understand how to make big money from the stock market. Also read the post: Becoming a Full-Time Trader Part I.
But what I emphasize here is not big money, but consistency. Full time traders can make big money, and they do it CONSISTENTLY, including when they have to set cut loss limits CONSISTENTLY too. Traders who have been able to make spectacular profits in the stock market, it doesn't mean they trade a few months later for big money.
Traders who can make big profits start from their CONSISTENCY. from the consistency of running the trading plan, slowly they can print quality trades and eventually turn into big profits that are obtained CONSISTENTLY as well. So, traders who have been able to profit consistently and/or consistently and big, they are not easily influenced by the psychological condition of FEAR AND GREED, because they have and run the trading plan.
I personally have only been able to make consistent profits with the technical strategies that I made after I executed my trading plan. At the beginning of running the trading plan, I often changed trading plans and in the end I found the right trading plan and stock "playing" strategy.
When I get consistent profits, this is also not a guarantee for me that I will not be carried away by the psychological current of fear and greed. However, a trading plan can lead you to the right trading consistency.
So, stop expecting too much from the stock market. Determine your trading type and strategy, and make a trading plan and implement it.
