Trading is about making money. A trader has only one objective in mind that is to make money. If a trader has any other objective to his trading, he will certainly fail as he has deviated from his objective. Objective trading is also called rule-based trading whereas subjective trading is usually more biased towards feel good trading.
Subjective Trader: The subjective trader takes his position in a stock in which he feels comfortable and knows the daily movement of that stock and then moves with the market and locking his gains as he moves along until his trail is hit and he is thrown out of the trade. He becomes a victim of market corrections and pullbacks and always loses out that little more he could have earned if he had chosen to exit at will instead of allowing the market to throw him out.
Objective Trader: The objective trader takes his position in any stock with all the logic and rules decided before taking any trade with a certain financial objective in mind and exits his position as soon as the same is achieved. He too locks his gains as the trade moves along but exits his position as soon as his objective is achieved. He does not care what happens to the trade after that and moves ahead looking for another trade. Such a trader sometimes loses out on a big move just because of his premature exit.
Yet, both are content and happy as they have achieved their objectives. The subjective trader waited for the market to decide how much it wished to give him and is happy taking whatever was given to him. The objective trader, on the other hand, decided what he wanted and took it and hence has no regrets and is happy too.
Learning from both trader types: No one is wrong in making trading decisions and both the traders know that it is not the accuracy of one’s prediction or assumption about a trade that makes one a successful trader but it is the ability to consistently pull out money from the markets that make the cash registers look green. Hence, they prefer to leave the trade-in profit, even if it is less on various occasions.
A final word: Consistently making profits, besides boosting the morale of the trader and building his confidence then becomes the stepping stone for the next step – increasing the capital for greater profits.
There is no limit to the amount one can make in the capital markets….it is all a matter of persistence, patience, discipline, and consistency.