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Last Updated : Aug 15, 2019 08:58 AM IST | Source:

What should be your ultimate objective while trading?

Independent thinking is not a thing which can be achieved overnight, but can be achieved with practice and patience

Moneycontrol Contributor @moneycontrolcom

Kapil Shah

Want to earn money? The ultimate objective of every profession is to earn a living and surplus money. But, is money the whole and sole aspiration for every professional? Do professionals think of money all the time?

No…When a good doctor operates on a patient, he focuses on the surgery and not the bill. When an artist performs on stage, he focuses on performance and not on the fees.


So, why should a trader keep money at the centre point? May be in trading we receive immediate gratification for our trades. However, there is a higher objective than money, which is independent thinking.

Usually, when we make profit, we give credit to our self and our skills. But when we lose, we blame the market, media, reports, analysts, tip providers etc. As a result, we do not learn the important lesson from our mistakes. Independent thinking allows us to take full responsibility for our trades.

A market doyen once said, “Understanding the importance of independent thinking is essential. Being able to think independently opens up a wealth of potential knowledge. It enables you to become more discerning about the things you hear, see and believe about markets and helps you question the irrational price movements and eliminate weird market assumptions.

"Initially it is good to learn by listening to experts and the trading/investing community. When you have achieved a sufficient learning curve, it is always good to undertake a self-analysis and self-experiment rather than confirm your opinions with other traders/investors. Cross-checking with experts calls for a probability of a loss in a dynamic market environment.”

The big question that arises is how to develop independent thinking? Sometimes we may realise the problem, but may fail to tackle the problem due to lack of thoughts, tools and techniques. We have lots of teaching, but less of methods. We may know the problem, but the bigger challenge is how to handle it.

The diagram below may help bridge the gap between what and how


Let put this diagram in the context of the market. Exchange maintains data of each and every trade, it has history of all the trades from the inception of stock trading. At the information level, the software provider converts the entire data to information. It gives us easy access to the entire trading history of every stock with just a mouse click. These are two stages where we have no involvement.

In stage 3, we get involved in the process, where information is converted into knowledge. In this, instructor (educational institute), books and online resource plays a key role. Here, we understand functionality, concepts, tools and techniques for trading. Up to this point, we have external support. But after that we have to journey alone. Of course, we spend more time in the knowledge and wisdom stage and keep on crisscrossing between the two stages.

But how does one gain wisdom from knowledge? It is an open secret that more practice on tools and techniques and more we apply it….more we receive feedback as an outcome. We need to do proper analysis of this feedback and need to measure it. If we can measure something, it can be managed. In nutshell, the more we practice on tools and techniques and undertake a proper study of the outcome, the more wisdom we attain.

How we can earn independent thinking?

Independent thinking is nothing but accumulation of wisdom. With this, we never blame others and take full responsibility for the trades. As result, it enhances our learning curve. It is a core ingredient for successful trading. The state of Independent thinking is not a thing which can be achieved over night. But with practice and patience, it can be achievable.

(The author is Technical Analyst at Emkay Global Financial Services Ltd.)

Disclaimer: The views and investment tips expressed by investment expert on are his own and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

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First Published on Aug 15, 2019 08:56 am
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