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Should I go long (buy) or short (sell) is the most important dilemma faced by any trader? There are only these two possibilities in stock trading after-all, a simple problem with two choices with a probability of being right 50% of the times. How can then one go horribly wrong in picking out one choice out of the two? Is trading really about buying or selling? To me it is a game of nerves. What it really tests is your patience and discipline and not so much your knowledge of stock markets. You can spend hours doing detailed analysis on shares, and still make huge losses. In fact trading is often compared with art or sports; it is more of a talent than an acquired skill. I was once told by my manager,” trading is not a job, it is a profession. A trader once, is always a trader.” That is probably the reason why retail investors are hardly successful in long term. Trading is often viewed as a source of extra income; a way to earn those few extra bucks. With this being the major motivations, they are then forced into the herd mentality; buy when everything is going up and sell when the market is heading downhill. Often, in such situations, you end up buying at market highs or selling at lows. Then when the market trend reversal happens, you panic and end up cutting your losses without having a proper stop loss target in mind. If by chance the stock does perform in your favour, you get greedy in booking your profits, again displaying lack of trading discipline. The news can again be a misleading factor when it comes to trading. Though ideally markets should react to the economic data, it is hardly ever the case (unless it is a major disruptive data e.g. Brexit, fed rate hike, market crash, etc.). Thus there goes a popular saying in the market which says “news just follows”, which implies that the market adjusts first in the anticipation of the news and by the time the actual news is out the major movement has already happened and you just end up playing the noise in the market. To me trading is not about trying your luck in the market every day and but waiting for that one big opportunity which comes once in a while and then giving it your best shot. Do you think Warren Buffett or George Soros trade regularly in the market? Being selective is the Key. They observe and study the market all the time, but the actual trades are just taken when they feel the time is right. E.g. Soros made billions when he betted against the Bank of England in 1992 (sold British pound) or during Brexit when he went short on pound but bought gold and gold miners. So wait for the right time, show enough discipline and patience and be selective, very very selective in your trades and you never know you might be the next Jhunjhunwala of India or perhaps the next Warren Buffett of the World.

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