Karma and the Art of Trading Stocks

The longer that I trade, the more I recognize that emotions and attitude determine my level of success more than anything else. Knowing how to trade and developing effective strategies isn't that difficult, but even the best traders must constantly battle their emotions. Losses are almost always caused by emotions rather than a lack of knowledge.

Another factor that determines trading success is a positive mental attitude. The great thing about the stock market is that there will always be another trading opportunity if you have capital. If you focus on that fact, you are much more likely to be successful. Setbacks are always temporary unless you give up.

So, what is the best way to cultivate a positive mental attitude and keep control of your emotions? One way is to embrace the laws of karma.

Karma is an abstract idea and means different things to different people. For me, it is the concept that in the future, I will be punished or rewarded for the attitudes and actions I take today.

In the stock market, bad karma will elicit punishment from the Market Gods if I fail to show them the proper respect. The Market Gods will find a way to extract revenge if not given the proper respect. They hate to be taken for granted, and they hate ego. But they also have the capacity to reward you if you respect their power. You are at their mercy.

Bad karma carries a very heavy price if you are not careful. I'm not a superstitious person. I don't believe in ghosts, ESP, astrology, or supernatural powers. However, I do believe in the power of karma when it comes to trading and the stock market.

Karma means different things to different people. For me, it's the concept that in the future, I will be punished or rewarded for the attitudes and actions I take today. In the stock market, bad Karma will produce punishment from the Market Gods if I fail to show them the proper respect. The Market Gods will extract revenge if not given the proper respect. They hate to be taken for granted, and they hate ego, but they also have the capacity to reward me if I'm respectful of their power.

My Five General Principles of Stock Market Karma

Be grateful. We are extremely lucky to be able to earn money in such a fascinating and generally enjoyable manner. The market owes us nothing. Trading is a gift that is given to us, but it doesn't automatically mean we will be successful. Our acceptance of the gift requires that we put forth effort and work to make it beneficial. If we are struggling, the fault lies within us, not with the market.

Don't criticize others. There is always going to be someone on the opposite side of our trades. We like to believe they know less than us and don't possess our superior logical and exceptional insight. It isn't true. When we start to believe that, the Market Gods will look to turn the tables on us. Don't attack other market players just so you can feel better about yourself. You won't fool the Market Gods.

Don't brag or cultivate a superior attitude. The Market Gods will not be taken for granted. They will let us succeed at trading if we work hard and show proper respect, but as soon as we start to believe we deserve to do well, we will be taught humility. No one is more powerful than the market, and if you even dare to think so, you will learn who is really in control of your destiny.

Don't carry a grudge. The market will treat us very poorly at times, but it does this for our own good. We suffer when we develop bad habits, fail to respect the power of the market or start to feel that we are superior traders. When the market punishes us, we need to understand that it is doing so to make us better. The market will be a cruel master at times, but it is the only way to make sure we effectively learn.

Respect the market beast. Above all else, we must respect the power of the market beast. Far too many market players try to pretend that investing or trading is easy. They claim to possess special skills or secret formulas that will guarantee that they will always outperform. The market will inevitably teach them they are wrong and that their success is only a temporary gift bestowed upon them if they respect the ultimate power of the market.

Some may find my rules of market karma to be trite or simplistic, but it can be calming and beneficial to ponder them periodically. Trading is a mental game, and learning to accept that you don't have control over outcomes will help you deal better with market challenges.

The reason you can become rich from trading is because it is very difficult. Don't believe anyone that tells you otherwise.

More Trading Basics

At the time of publication, Rev Shark had no positions in any securities mentioned.