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 Rights, ofs,fpo and more

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Topics 11

• Rights, ofs,fpo and more

• Rights, ofs,fpo and more

Basics of stock market

• Why invest?
• who regulates
• financial interdependence
• IPOs
• Stock Market returns
• Trading system

• Day end settlements
• Corporate actions
• News and Events
• Getting started
• Rights, ofs,fpo and more
• Notes

 
 

IPO, OFS, and FPO – How are they different?

learning sharks stock market institute
 
 
Firstly, A company is first introduced to the publicly traded stock markets through an initial public offering. The promoters of the business decision to sell a specific number of shares to the general public during the IPO. Chapters 4 and 5 provide a thorough explanation of the rationale for going public as well as the IPO procedure.
 
Secondly, Going public is primarily done to raise money for expansion projects or to pay out early investors. The company’s promoters might still require additional funding after the IPO. They are listed on the exchange and traded in the secondary market. There are three possibilities: Rights Issue, Offer for Sale, and Public Offer Subsequent.

The Broker of Stock

 
Importantly, The promoters have the option to solicit additional. By funding from their current investors. They provide them with new shares at a reduced price. 
 
In proportion to the existing shares held by shareholders, the company issues new shares. For instance, a 1:4 rights issue would offer 1 additional share for every 4 shares already held. 
 
This option may seem appealing, but it restricts the company from raising money from a select group of shareholders. Who may not want to make additional investments? 
 
Since, When shares are created and offered to shareholders as part of a rights issue, the value of the previously held shares is diminished.

OFS

Undoubtedly, The promoters can choose to offer the secondary issue of shares to the whole market. Unlike a rights issue restricted to existing shareholders. Moreover, The Exchange provides a separate window through the stockbrokers for the Offer for Sale. 
 
The exchange allows a company to route funds through OFS only if the Promoters want to sell out their holdings. Maintain minimum public shareholding requirements (Govt. PSU has a public shareholding requirement of 25%).
 
Also, there is a floor price set by the company, at or above which both Retail and Non-Retail investors can make bids. The shares are allotted, and if bids are at a cut-off price or above will be settled by the exchange into the investor Demat account in T+1 days.
 
For example, an Offer for Sale is NTPC limited. Which offered a maximum of 46.35 million shares at a floor price of Rs 168 and was fully subscribed in the 2-day period. The OFS was held on 29th August 2017 for Non-Retail Investors and 30th August 2017.

FPO

Definitely, The goal of an FPO is to raise additional capital after it has been listed, but it uses a different application and shares allocation process. Without a doubt, An FPO allows for the creation of new shares as well as the diluting of existing ones. Similar to an IPO, an FPO requires the appointment of Merchant Bankers to draught a Draft Red Herring. Furthermore,  The prospectus that must then be approved by SEBI before bidding can begin within a three to five-day window. 
 
Shares are allocated based on the Cut-off Price decided after the book-building process. Investors can place their bids through ASBA. At last, FPOs are rarely used now that OFS has been available since 2012 because of the drawn-out approval process.
 
Accordingly, The FPO is made public knowledge after the company selects a Price Band. Interested parties can apply offline at a bank branch or online through the ASBA portal using Internet Banking. Especially, Following the close of the bidding, the demand-based cut-off price is announced. The additional shares awarded are listed on the exchange for trading in the secondary markets.
 
Certainly, Engineers India Ltd. underwent an issue in February 2014 with a price range of Rs. 145–Rs. 150, is an example of an FPO. There was a threefold oversubscription for the issue. The shares were trading at Rs 151.1 on the day the issue officially began. The lower price band was 4.2% less expensive than the going rate.

Difference between OFS and FPO

  1.  An OFS is used to offload Promoters’ shares while an FPO is used to fund new projects.
  2. Dilution of shares is allowed in an FPO leading to change in the Shareholding structure. While OFS does not affect the number of authorized shares.
  3. Only the top 200 companies by Market Capitalisation can use the OFS route to raise funds while all listed companies can use the FPO option.
  4. Ever since SEBI introduced OFS, FPO issues have come down, and companies prefer to choose the OFS route to raise funds

Getting started!

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Basics of stock market

• Why invest?
• who regulates
• financial interdependence
• IPOs
• Stock Market returns
• Trading system

• Day end settlements
• Corporate actions
• News and Events
• Getting started
• Rights, ofs,fpo and more
• Notes

 
 

Getting started

Firstly, You are now ready to delve deeper, assuming you have finished reading and comprehending all 12 chapters in our first module, Introduction to Stock Markets.

Secondly, Your quick, practical introduction to the stock markets is the goal of the first module. We have chosen the concepts you should understand with care in our effort to introduce the stock markets to you, especially if you are completely unfamiliar with markets. It is a good sign if you still have a lot of questions at this point. As we move on to other modules, you will discover your answers.

You need to comprehend why we have so many different learning modules and how they relate to one another at this point.

You need to comprehend why we have so many different learning modules and how they relate to one another at this point. To give you a head start, I’ve listed some of the Varsity modules we’ll be studying.

  1. Introduction to Stock Markets
  2. Technical analysis
  3. Fundamental Analysis
  4. Futures Trading
  5. Option Theory
  6. Option Strategies
  7. Quantitative Concepts
  8. Commodity Markets
  9. Risk Management & Trading Philosophy
  10. Trading Strategies & Systems
  11. Financial Modeling for Investment practice 

how are they interrelated?

The goal of “Varsity at Zerodha” is to build a library of excellent market-related educational materials. The information will include topics like risk management, financial modelling, derivatives, trading strategies, and fundamental and technical analysis. Each major subject is divided into a module. If you’re unfamiliar with the financial markets, you might be wondering where each of these subjects stand in relation to the bigger picture.

 

Allow me to post a straightforward question to you in order to help you gain perspective.

 

What do you consider to be the single most crucial element for market success? Market success is simple to define: if you consistently make money, you are successful; if not, you are not!

So if you were to answer this question for me, chances are you will think about risk management, discipline, market timing, access to information, etc. as the key to success in markets.

 

While one cannot deny the importance of these factors, what is even more compelling and primary is developing a point of view (POV).

A point of view is the art of developing a sense of direction on a stock or the markets in general. If you think the stock is going up, your POV is bullish hence you would be a buyer of the stock. Likewise, if you think a stock is going down your POV is bearish, you would be a stock seller.

 

Having said that, how do you actually develop a point of view? How do you figure out if the stock is going up or down?

 

To develop a point of view, one needs to develop a systematic approach to analyze the markets. A few methods are using which you can figure out/ analyze what to buy or sell. They are:

 

  1. Fundamental Analysis (FA)
  2. Technical Analysis (TA)
  3. Quantitative Analysis (QA)
  4. Outside views

 

 

Here is an example of a trader’s typical thought process when determining a POV (whether to buy or sell stocks) based on a specific method of analysis to give you a sneak peek:

 

FA-based POV: The third-quarter results appear to be impressive. The business reported a 25% increase in top line revenue and a 15% increase in bottom line revenue. The company’s forecast appears promising as well. The stock looks bullish because all the fundamental factors are in favor; as a result, it is a buy.

 

QA-based POV – The stock’s price to earnings (PE) recently increased and reached the third standard deviation. The PE’s chance of crossing the third standard deviation is just 1%. Therefore, it is wise to anticipate a return to the mean; as a result, the stock is a sell.

 

From a distance, the stock appears to be a buy because the TV analyst suggested it.

 

You should always adopt a point of view that is based on your own analysis rather than on what someone else thinks, as doing so almost always leads to regret.

 

  1. Buy the stock in the spot market.
  2. Buy the stock in the derivatives markets.
    1. Within derivatives, you can choose to buy the futures.
    2. Or choose to trade via the options market.
      1. Within the options market, there are call options and put options.
      2. You can also do a combination of call and put options to create a synthetic bullish trade       

 

 

Therefore, what you decide to do after developing a POV is entirely different. Trading successfully depends heavily on selecting the appropriate instrument that supports your point of view (POV).

 

For instance, I would be better off making a delivery trade if I had a 1-year outlook and was extremely bullish on the stock. But if I’m blatantly bullish on the stock from a short-term (let’s say, one-week) perspective, I’d rather pick a futures instrument to trade.

 

It would be wise to pick an option instrument if I’m bullish with restrictions (for instance, if I expect the markets to rise as a result of a strong budget announcement but don’t want to take on much risk).

 

So the message here is – the market participant should develop a point of view and complement the POV with the right trading instrument. A well researched POV combined with the right instrument to trade is a perfect recipe for market success.

 

Also by now, hopefully, you have got a sense of how all the different modules in “Varsity” play an important role in assimilating the market.

 

Go ahead and explore the content on Varsity at Zerodha while keeping this in mind.

 

The concepts that will enable us to develop POV based on Technical and Fundamental Analysis will be covered in the following two modules.

 

You will have a better understanding of how to develop a point of view on markets after reading these two modules. We will talk about the various trading instruments you can use to complement your perspective in the later modules. In order to help you start calibrating your trades with efficient risk management strategies, we will speed up the flow as we go along.

Without a doubt, Learning Sharks Institute puts a lot of effort into keeping our list of share market training courses current. However, if there is a conflict between the programs listed on this list and those in the Learning Sharks Academic Calendar, the Calendar will take precedence.

Working through guilt and moving on

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Profits in the trading industry are not always guaranteed. Even the most experienced trader occasionally commits a serious error and pays the price. Both independent short-term traders and professional traders at large financial institutions, for instance, are capable of mounting significant losses. Don’t feel bad if you are going through a significant drawdown. You aren’t the first and you won’t be the last to do this. However, it can be challenging psychologically to suppress unease. Depending on how intense it is, you might also feel scared and on the verge of panic.

learning sharks stock market institute
source: The storyboard that

One of the most emotionally taxing situations to deal with is losing something. Your identity and means of support are at stake if you are a professional trader who is actively trading. When you trade part-time, it might be difficult to fund your account from your regular income while also wondering when you’ll be able to recover your losses. You may struggle to cope with feelings of loss, remorse, and dread depending on your personality and previous market experience. You won’t be able to resume your original course of action, though, unless you learn to regulate your emotions.

 

Some traders become extremely remorseful when they experience a significant downturn. When we violate a personal moral code, we feel bad. Almost anyone can feel bad after losing money. We wish to follow the guidelines that our parents and teachers instilled in us, many of them stressed the importance of working hard and saving money. Risking money is a requirement of short-term trading, and for many people, risking money seems to go against their upbringing. For instance, the initial response from many inexperienced traders when they tell their loved ones they’re going to start actively trading short-term is “You’re going to lose your money.”

 

They say it as if inexperienced traders are seriously screwing up. So, if you want to end up with enormous gains, you’ll have to put money at risk, and it’s likely that you’ll lose a lot of it before you learn the skills you need to trade well in a range of market circumstances.

 

Do you anticipate financial loss? Yes. Is it unethical morally? not from a trader’s point of view. It’s critical that you recognise and alter the underlying assumptions that underlie your guilt. But the first thing you must decide is whether your guilt is justified. We can be shielded by guilt. Having a lot of losses that are difficult to recover is not a smart idea. You will naturally feel bad if you trade funds that you just can’t afford to lose or will find it extremely difficult to repay. Making sure that your losses are fair and only a brief setback is crucial. Or, if the losses are due to a lack of skill, make sure you have a backup plan to quickly replace your losses.

 

Make sure you can readily replace your losses from another source of income, such a second employment, if the losses are the result of a lack of skills. If it truly indicates losses that may permanently jeopardise your financial security, it will be difficult to restrain guilt.

 

It’s helpful to consider any potential assumptions that may underpin your guilt if you find that you can truly afford to take trading losses but still feel sorry. One explanation is that you might have been taught that money is sacrosanct and that risking and losing it for any purpose is immoral. This is a common misconception, but if you want to actively trade, you need to alter your perspective on money. A serious trader views money as nothing more than a tool for making more money. It is merely one of the tools you need to properly trade. Consider it more like “points” that you use to keep score of how well you are performing rather than “money.”

 

The drive to be perfect is a second underlying premise that causes guilt. You can feel guilty because you think you should avoid making mistakes in trading or suffering losses. If you do, you might think that you are a “bad” person or insufficient. It’s critical to refrain from becoming upset when you lose.

Losses are a common occurrence in trading. Losses may build if you are a beginning trader, but that doesn’t make you a “bad” person.

 

 

You may be an inexperienced trader if you haven’t yet acquired the necessary trading skills, but you aren’t a horrible person or insufficient. Additionally, if you are an experienced trader experiencing a large drop, you might feel bad about something that wasn’t your fault.

 

It’s possible that what you’re going through is only a brief shift in the market. Although you might need to adjust your strategy, this does not imply that you are unqualified. Simply put, it suggests you need to look into other possibilities. Guilt is not helpful. You dwell on how awful things are when you feel guilty. However, when you are actively dealing, there is no time for reflection. It does nothing. You need to aggressively address the issue if you want to stay ahead of the pack. Guilt prevents you from freely looking for original, novel trade solutions, which you need to do.

 

Sometimes guilt can serve as a form of protection, but when we trade, we frequently feel bad about the losses that come with the territory. It’s critical that you understand how to manage unproductive guilt if you experience it. The more quietly and freely you can trade, the more money you’ll make.

Conquering guilt and moving forward

by

Profits in the trading industry are not always guaranteed. Even the most experienced trader occasionally commits a serious error and pays the price. Both independent short-term traders and professional traders at large financial institutions, for instance, are capable of mounting significant losses. Don’t feel bad if you are going through a significant drawdown. You aren’t the first and you won’t be the last to do this. However, it can be challenging psychologically to suppress unease. Depending on how intense it is, you might also feel scared and on the verge of panic.

learning sharks stock market institute
source: The storyboard that

One of the most emotionally taxing situations to deal with is losing something. Your identity and means of support are at stake if you are a professional trader who is actively trading. When you trade part-time, it might be difficult to fund your account from your regular income while also wondering when you’ll be able to recover your losses. You may struggle to cope with feelings of loss, remorse, and dread depending on your personality and previous market experience. You won’t be able to resume your original course of action, though, unless you learn to regulate your emotions.

 

Some traders become extremely remorseful when they experience a significant downturn. When we violate a personal moral code, we feel bad. Almost anyone can feel bad after losing money. We wish to follow the guidelines that our parents and teachers instilled in us, many of them stressed the importance of working hard and saving money. Risking money is a requirement of short-term trading, and for many people, risking money seems to go against their upbringing. For instance, the initial response from many inexperienced traders when they tell their loved ones they’re going to start actively trading short-term is “You’re going to lose your money.”

 

They say it as if inexperienced traders are seriously screwing up. So, if you want to end up with enormous gains, you’ll have to put money at risk, and it’s likely that you’ll lose a lot of it before you learn the skills you need to trade well in a range of market circumstances.

 

Do you anticipate financial loss? Yes. Is it unethical morally? not from a trader’s point of view. It’s critical that you recognise and alter the underlying assumptions that underlie your guilt. But the first thing you must decide is whether your guilt is justified. We can be shielded by guilt. Having a lot of losses that are difficult to recover is not a smart idea. You will naturally feel bad if you trade funds that you just can’t afford to lose or will find it extremely difficult to repay. Making sure that your losses are fair and only a brief setback is crucial. Or, if the losses are due to a lack of skill, make sure you have a backup plan to quickly replace your losses.

 

Make sure you can readily replace your losses from another source of income, such a second employment, if the losses are the result of a lack of skills. If it truly indicates losses that may permanently jeopardise your financial security, it will be difficult to restrain guilt.

 

It’s helpful to consider any potential assumptions that may underpin your guilt if you find that you can truly afford to take trading losses but still feel sorry. One explanation is that you might have been taught that money is sacrosanct and that risking and losing it for any purpose is immoral. This is a common misconception, but if you want to actively trade, you need to alter your perspective on money. A serious trader views money as nothing more than a tool for making more money. It is merely one of the tools you need to properly trade. Consider it more like “points” that you use to keep score of how well you are performing rather than “money.”

 

The drive to be perfect is a second underlying premise that causes guilt. You can feel guilty because you think you should avoid making mistakes in trading or suffering losses. If you do, you might think that you are a “bad” person or insufficient. It’s critical to refrain from becoming upset when you lose.

Losses are a common occurrence in trading. Losses may build if you are a beginning trader, but that doesn’t make you a “bad” person.

 

 

You may be an inexperienced trader if you haven’t yet acquired the necessary trading skills, but you aren’t a horrible person or insufficient. Additionally, if you are an experienced trader experiencing a large drop, you might feel bad about something that wasn’t your fault.

 

It’s possible that what you’re going through is only a brief shift in the market. Although you might need to adjust your strategy, this does not imply that you are unqualified. Simply put, it suggests you need to look into other possibilities. Guilt is not helpful. You dwell on how awful things are when you feel guilty. However, when you are actively dealing, there is no time for reflection. It does nothing. You need to aggressively address the issue if you want to stay ahead of the pack. Guilt prevents you from freely looking for original, novel trade solutions, which you need to do.

 

Sometimes guilt can serve as a form of protection, but when we trade, we frequently feel bad about the losses that come with the territory. It’s critical that you understand how to manage unproductive guilt if you experience it. The more quietly and freely you can trade, the more money you’ll make.

A guidebook for work productivity

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A demanding career is trading. You will have a difficult time achieving consistent profits if you are a newbie trader. Although many people are drawn to trading, very few end up being successful traders. To pursue trading, one must be a certain type of person—someone who can overcome obstacles and keep going even when all appears lost. To persevere in the face of difficulty, beginning traders might employ the following three major strategies: Develop a spirit of resistance, devise a substitute system of rewards, and concentrate on the journey rather than the goal.

learning sharks stock market institute
source: Theprogessindex

Traders frequently balance sentiments of inadequacy and incompetence against haughty, irrational overconfidence. When you operate in the field of trading, it is reasonable to think that you will experience far more losses than profits. It’s challenging to work in these circumstances. We are accustomed to receiving payment for a job well done, while new traders are more likely to put in lengthy hours for nothing but losses. Trading needs perseverance, particularly when faced with setbacks and what seems like never-ending failures. When faced with such situations, the confidence of the majority of individuals is badly rattled, and they frequently respond with arrogant overconfidence. They exaggerate their accomplishments to the point of becoming overly enthusiastic.

 

Profits are a clear and natural reward for our trading efforts, but they are not necessarily correlated with our level of effort. Your mood is probably going to fluctuate along with your account balance if you only think about the profits. Setting up a different reward schedule can provide you more regular incentives and enable you to keep going even when you’re on a losing streak. After putting in a certain amount of time, treat yourself (the end of each day, for example). Buy a great meal for yourself or engage in a fun activity. You’ll continually feel content with your career and stay with it if you give yourself a pat on the back for your efforts.

 

Finally, it is crucial to put the process before the outcome. Although the goal of trading is to make money, the irony is that if you only think about the results of your trades, you’ll put too much pressure on yourself and become overwhelmed. You’ll be more at ease and inventive while trading if you put more emphasis on intrinsic incentives as opposed to extrinsic ones. You may trade regularly and profitably by rewarding yourself for effort rather than results, focusing on the act of trading rather than earnings, and developing a fighting spirit.

Grounded and objective

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The value of tech stocks fell on Thursday. Mark just lost 5000 rupees on his ITC stake. Even though it is Friday morning, he still feels bad. He is unable to forget his losses. Though he has been making an effort, his heart isn’t in it as he scans over a number of charts. He had observed a few potential setups, but he hesitated when it came time to place a transaction. He is only able to focus on the losses he sustained yesterday. As he considers the money he might lose today if he isn’t careful, he experiences fear. But you can’t let failures deter you from trading the markets. You must trade with composure, objectivity, and conviction.

 

When you have significantly lost money, it is tough to remain impartial. After a defeat, it’s natural for people to feel disappointed. But you can’t let it worry you if you want to trade profitably. You have to sincerely believe that it is irrelevant in some way. There are several ways to trade more objectively. Trading with money you can afford to lose will make losing less painful. To reduce the amount of money you will lose, you can also do smaller deals with restrictive stops.

learning sharks stock market institute
Source: USAtoday

However, you finally need to figure out a way to depersonalise the entire trading process. When it’s just business, you can operate more freely, creatively, and decisively. Establishing your identity firmly in a different reality is the best way to keep your independence and impartiality. You shouldn’t regard trading as your primary means of support. Really, it’s simply a job. Making it your reason for being will risk your reputation and your money, and the added psychological pressure can lead you to cave. But if you stake your identity in something else, you’ll be able to handle trading setbacks.

 

Trading should ultimately just be business. Don’t let it determine who you are. Your family, your friends, or the leisure activities you value most should serve as the foundation for your identity. The events that take place during the trading day won’t have much of an effect on your identity if you have a strong foundation outside of the trading world. You’ll be more at ease and capable of handling pressure and setbacks. Why should you consider it important? Losses, setbacks, and market volatility won’t bother you if you ground your identity in other things. You’ll have more freedom to engage in market trading with an innovative mindset that will finally lead to long-term financial success.

Dont be a Grinch

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Dr. Seuss’s tale “How the Grinch Stole Christmas” is a metaphor for contemporary life. The Grinch snuck into town and attempted to spoil everyone’s Christmas by taking gifts and other materialistic Christmas symbols, but he was unable to take away the holiday spirit from peoples’ hearts. The residents of the town felt a sense of community and appreciated what they had. The tale ought to serve as a reminder of the necessity of pursuing psychological equilibrium in the midst of our frantic life. It is imperative that you make an effort to establish a personal connection with them. Although trading is significant, it is not the main factor. One of the numerous things you do is this.

learning sharks stock market institute
source: newsnation

A demanding career is trading. It calls for perseverance in the face of setback after setback and intense concentration on maintaining your level of performance. But a relentless pursuit of success typically ends in failure over time. Traders who keep their focus on peak performance succeed over the long term. Additionally, achieving psychological equilibrium is necessary for developing a peak performance mindset: Rather than concentrating entirely on trading, make sure that your life has several facets. Make sure you enjoy yourself in activities other than trading. Enjoy life to the fullest and spend time in satisfying relationships. Don’t be all business and relentlessly focused on making money.

 

Don’t forget to appreciate the benefits of being a trader, several seasoned traders caution. Trading grants you the freedom to spend time with your loved ones, family, and friends. Trading gives people the means to live happily. Therefore, whether or not you had a successful year, treat yourself by taking a well-earned vacation. Your desire to improve your life is one of the reasons you trade. It’s critical to keep that in mind. It’s crucial to appreciate all that life has to offer. It will chew at you if you are not living life to the utmost. You’ll ask yourself, “Why am I spending my life trading?” in the back of your head. Remember your trading goals during this time.

 

Maintain a healthy balance between your trading career and the pursuits that give your life a greater purpose. You’ll be able to develop the peak performance attitude, which is a crucial component of continuously lucrative trading, if you make sure to lead a balanced life.

A good mood

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learning sharks stock market institute

Have you ever put on a trade while under tremendous strain and discovered that you were unable to function normally? Your trading strategy came into doubt, and suddenly, you paused when you should have taken immediate action throughout the trade. It could be difficult to recover when you’re in this state. It is greatly influenced by one’s mood. You’ll feel paralysed and stuck when you’re unhappy. Determination is influenced by your mood. You’ll trade more sincerely if you’re feeling better.

 

The psychologists Benie MacDonald and Graham Davey shown in a ground-breaking experiment that striving for excessive perfection is a function of two factors: a negative mood and the conviction that mistakes have serious repercussions. Students in college were given a task that required them to find 100 spelling and punctuation problems. A participant was placed into one of four experimental groups at random. Some participants were warned that making a mistake on the task would result in a mild form of punishment, while making a mistake had no repercussions for other individuals. While some participants completed the activity in a positive mood, others completed it in a negative mood that the researchers artificially produced.

 

Participants who were unhappy or worried that they would be punished for making a mistake had a tendency to check and verify their work excessively. In other words, they made an effort to attain an impossible standard of perfection. Why did this particular group of individuals strive so desperately for unattainable perfection? These participants, according to MacDonald and Davey, let their feelings control how they acted. They reasoned, “I’ll keep looking for errors until I’m pleased.” This isn’t a very effective tactic, though, when you’re feeling down. If you check and recheck your work until you are satisfied, you will check and recheck longer than is necessary because a negative mood doesn’t leave you very quickly.

 

This experiment explains why, while feeling down, people gravitate toward high perfectionism. If you are prone to self-doubt, being unhappy will make it harder for you to feel confident. You’ll doubt the viability of your trading strategy and whether the market conditions are ideal as you try to put it into action. You’ll never be content and feel as though something is off. One of two things must be done at this moment. Either avoid trading while you’re feeling down, or don’t let your feelings control what you do.

 

Remind yourself that you will be more likely to second-guess your choices and act irrationally or impulsively when you’re feeling down. It is feasible to get around the psychological processes that affect your decision-making if you are aware of them. You can try to ignore your mood and firmly and logically try to implement your trading strategy with discipline if you believe, “I’m in a terrible mood, so as a result, I’m irrationally questioning my trading plan or my talents.” Whatever course of action you choose, keep in mind how strongly your mood affects your ideas and choices.

 

Putting up a good fight

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A trade’s result is never certain. Chance is a constant in life. For example, while going long, all indicators can point to a strong and stable trend, but it’s always possible that an unexpected, unfavourable occurrence could ruin it all. You can never predict the future with certainty. However, it’s okay. Every time you make a trade, everything need not go according to plan. The big picture matters more than any particular trade’s result. The sum of your trading winnings is what matters in the end.

 

It relieves stress to consider the big picture. You can ask yourself, “What’s the big deal? It’s only one of several trades. You can calm down by using an excellent thinking technique called the larger perspective. Here’s one more: Fight as though you should prevail, but don’t pay attention to the result.

learning sharks stock market institute
Source: Money control

Stress relief comes from imagining the larger picture. What’s there to worry about? you can rationally ask. This is but one deal among many. You can utilise this excellent thinking technique to calm down by considering the wider picture. Another example is this: Despite fighting as though you should win, keep your attention off of the result.

 

Have you ever heard the saying “Winning is the only thing”? Although it may seem ironic, winning cannot be “the only thing.” The adage “It’s not whether you win or lose, but how you play the game” is more appropriate for success. You’ll have a better chance of success if you trade with resolve and discipline. The markets and trading must be respected. You are still unable to control the marketplace. The markets are capable of acting however they like. You must be prepared to accept the offers that the markets make to you. It’s crucial to take pleasure in the trading process. It’s difficult intellectually.

 

You can use your creative abilities to identify trading opportunities and feel a sense of accomplishment by solving difficult problems. Sometimes you’ll win, but many times you will lose. But each trading opportunity has a little something to teach you about yourself, the markets, and trading. It may be just a little thing, like how you can accept taking a loss after a fluke ruined a perfectly good trade. Or maybe you will merely learn something about your current limitations. There’s always something to learn. Whatever you do, though, don’t get caught up focusing entirely on winning. You can’t completely control whether you win or lose and when you think about winning, you just get distracted.

 

Enjoy the trading procedure. Strive hard and attempt to overcome any challenge. But don’t do it because you must win; do it because you love it. You’ll be able to manage your emotions if you can let go of the notion that winning is everything. You won’t feel inadequate or self-conscious when you face a setback. Instead, you will actively and proactively consider your options. What can you do as your next move to advance toward your objectives? Hard to accomplish.

 

In today’s world, we are motivated to succeed, but oddly, those that succeed in the long run aren’t driven by success. They are totally engrossed in the trading process, developing their talents, and finding peace in the knowledge that they have put in their best effort. Even simply knowing that they made a good attempt fills them with satisfaction.

The golden mean

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Are You Trading for Real or Is That Just Wishful Thinking?

 

 

The Golden Mean is something you’ve probably encountered if you’ve spent any time around trading. On a price chart, it might have appeared as Fibonacci lines. The Fibonacci sequence, which consists of the numbers 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, and so forth, is a series of numbers in which two successive numbers are added together to provide the third. Some traders define important support and resistance levels using ratios derived from the Fibonacci number series, frequently on the assumption that these estimates are more “natural” because they are based on the Fibonacci sequence.

 

Fibonacci asserted that seemingly random numbers had recurring patterns. Later Fibonacci adherents expanded his theory to stock and futures trading in an effort to identify patterns in seemingly random price movement. But are the seemingly random price changes “natural and clean” patterns, or is this merely wishful thinking?

Refer and Earn, learning sharks stock market institute
Source: Internet

The Golden Mean Ratio can be calculated by adding two random values. The outcome is then included in the total. One can find a defined pattern by dividing the former number by the latter after eight reverberations. This pattern is represented mathematically as 0.618 or its reciprocal, 1.618. The most beautiful pieces of art, music, and architecture are said to have this Golden Mean. It is frequently observed in nature in the composition of many of the most exquisite plants, creatures, and seashells. The Golden Mean was important to Greek philosophers and mathematicians because it showed how harmony exists in nature, the arts, and even the human body. It was the picture of equilibrium—the ideal form…the most beautiful sight.

 

It’s surprising how many consistent patterns there are in the natural world, but social scientists have long recognised that there are very few, if any, consistent patterns in human behaviour. What exactly is trading? It reflects human nature. It was invented by people and is not a natural phenomena. It’s not flawless. It’s not spotless. It is unstable and in turmoil. A good trader must embrace the ambiguity of human nature and take on the challenging task of uncovering consistency where there isn’t much of it.

 

 

However, a lot of traders find concepts like the Fibonacci number sequence to be fascinating, almost mystical. However, not every trader finds the Fibonacci number sequence to be beautiful. In fact, the editor of a well-known trading publication pointed out that the pattern may not even be magical. It can appear to operate by pure coincidence (the market is likely to correct somewhere between one-third and two-thirds of the previous trend, which is similar to the commonly used Fibonacci ratios of .382 and .618.) Your position on these subjects could say a lot about your trading style.

 

The superstitious elements of trading appeal to a lot of traders. They begin looking for techniques based on “rules of nature” to give them a strong but erroneous sense of security since they lack confidence in themselves. In an effort to find certainty and the security it offers, they look for universal and general rules. This is what ideas like the Fibonacci number sequence do. They present potential. One has the luxury of believing in the more powerful, almighty rules of nature rather than in oneself. It’s comparable to accepting fate, luck, or destiny.

 

One may opt to live a passive existence, putting one’s faith in other forces, and waiting for the proverbial “stars to align” in one’s favour. The most prosperous people in society, however, don’t have time to wait for luck or fate. And it would be advisable to give up any superstitions if you want to become or remain a successful trader. To succeed, you must improve your trade abilities. Build them up to the point where you are impatiently anticipating your alleged “luck” to turn against you in order to show them how resilient you really are.

 

You’ll find that you can embrace the risk associated in trading the market and rely only on yourself, your abilities, and nothing else when you have strong trading skills and the rock-solid confidence they will provide you.