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Why Do we Trade?

Written by :
CapitalVia
Posted On :
June 12, 2017

What drives us to trade? 

The answer varies for trader to trader. It is influenced by circumstances, wants, wishes, and desires.

Below are some common reasons that people get induced in trading (find yours) 

Entertainment 

Gambling 

Adventure 

Intellectual Pursuit/Curiosity 

Side Income 

Primary Income 

Professionally Managing A Fund

Your reasons influence how you attack the markets:

Those who manage their own wealth/Primary Income/Side Income/Professionally Managing a Fund: Prioritize account growth over shallow draw downs, managing risk is the first priority. They play the strategy which is practiced in the game of football called "counter attack". First, they make sure a solid defense is in place, and then go for the attack.

Those who gamble: Will undoubtedly gravitate towards penny stocks and out-of-the-money options.

Those seek Adventure: Take a high risk in a single trade and tend to wipe out their capital quickly.

Intellectual Pursuit/Curiosity: Highly risk averse

The big missing part is taking responsibility:

Your reasons for trading also greatly influence the amount of time and energy you’ll need to commit to the markets. Simply placing trades and having fun without regard to your P&L will take a few minutes a week. On the other hand, launching a fund/trading for full-time income/ to be a responsible advisor will take all your time and energy just like any other business startup or any other profession like an engineer or doctor (yes its true).

If you have a clear picture of what you want, you can effectively design a market strategy that accomplishes your goals and fits within your time and energy constraints. Without this clarity you’ll get stuck, looking for something you can’t find.