Market analyst Basanta Pandey provides insights into why highly analytical individuals often experience greater losses in stock trading, stressing the importance of following market trends, effective risk management, and reacting to market signals over personal predictions.
Market analyst Basanta Pandey points out that individuals who tend to over-analyze the stock market and place too much confidence in their own judgment often end up incurring significant losses. He states that to achieve success in stock trading, the key is not trying to beat the market, but rather having the ability to follow its existing trend.
Follow the Market, Not Your Ego
Pandey highlights the principle that “the market is always right” should be given a priority in stock trading. He explain that decisions should be made based on market actual Price Action and Volume, which are visible to everyone, rather than relying on one’s individual estimates or predictions. This approach helps in making more objective choices.
According to Pandey, many educated, experienced, or leadership-role individuals make the mistake of holding onto incorrect decisions for too long. They do this because of their strong belief that their own analysis must be correct. This tendency increases the risk of a small loss gradually escalating into a much larger one.
Risk Management is Crucial
He stresses that risk management is a most important aspect of trading. Pandey suggests that as soon as a trader realizes they made a wrong decision, they should use a stop-loss and exit the position immediately. He provides a simple example: if you find yourself on the wrong bus, it is wiser to get off at the nearest stop and catch the correct bus, rather than traveling all the way to the final destination before turning back.
Pandey also mentioned that successful trading is built on responding to the signals the market is showing, rather than trying to predict future movements. Before buying any stock, he recommends a thorough analysis of the trend, price, volume, and the overall structure of the market.
NEPSE Showing Positive Signs
Currently, Pandey observes that NEPSE has been forming “Higher Highs” and “Higher Lows”, indicating a positive market structure. However, he advises that instead of trying to guess how far the market will go, it is more appropriate to simply follow the current trend that is already in motion.
AI Disclaimer: This article was originally published on https://bajarkochirfar.com. It has been translated with the help of AI. For the best understanding and accurate facts, we recommend reading the original Nepali version.
