Behavioural Tactics to Fix Mistakes
Now that we have learned the behavioral tactics to deal with our emotions. Similarly, let us discuss the steps to rectify our mistakes.
Step 1: Mistakes are in reality, synonymous with not following rules. So, at the end of each day, ask yourself “Did I make a mistake?” However, if you didn't even have any rules in place then everything was a mistake.
Step 2: If you did not make any mistake then pat yourself on the back. If you lost money despite sticking to the rules, tell yourself “Sometimes, the market controls whether you win or lose and there is nothing you can do about that.”
Step 3: If you made a mistake then try to discern the factors and conditions that led up to it. Ask yourself, “How might that happen again?” - Note these scenarios down and pin them at eye level across your trading setup.
Step 4: Just parallel to these scenarios, also note down some effective responses. Now, rehearse performing these on a daily basis and gradually, you will realise, they turn into reflexes for you rather than forced.
So, from this particular module, we have learned how psychology plays an important role while trading in the stock market. We also learn how an investor's mindset differs from a trader's mindset. Therefore, before you start trading or investing in the market, it is essential to categorise yourself. By categorising, it is easier to ride the market, and definitive psychology helps in paving the way to success in the stock market.