Life Lessons at the Stock Market

Life and stock market both are so similar, they are almost identical.

Both of them run in waves. 
Up, down and sometimes just cruising along sideways...

Some times it's bull market in life and all things are hunky and dory. You are absolutely sure of a great run forever. Sometimes everything moves southward in spite of all your efforts. You only see the sides of a bottomless pit and you despair that there is no bottom. Sometimes life just moves along peacefully and lulls you into complacency when in fact next turn of events are just around the corner.

Stack market reflects life because after all it is made up of millions of humans.

I won't call myself a successful trader yet. That is not surprising considering the fact that only 10% succeed here. But my learnings during last two years have revealed to me the mistakes I made in life. I rue the fact that I started trading so late in life when I am a senior citizen. I have lost so many opportunities, not to earn money, but to improve my life.

I would recommend all parents to introduce their children to the world of trading. It has to offer so many life skills utterly necessary to succeed in life.

First of all stock market teaches you to take both loss and profit with equanimity. A skill most of us sorely lack. That's why most of the failures in market can be attributed to this one reason. In fact when you start trading, at least one year should be spent on acquiring this skill, until it is an integral part of you. You just can't succeed without it. I think same applies to life as well. If you are afraid of failures you will not whole heartedly go for options that are little way out but suitable for you. You will lead a mediocre life, without ever knowing that a great opportunity was just around the corner. A single failure or success does not mean much in life, there are so many more ahead.

Second even more important skill it teaches is handling of  'Loss Aversion'. You buy some property and instead of appreciating, it's value keeps going down. There also are other hassles that you have to take care of. It can come to a point where rather than you owning the property it is just the other way around. Still you don't get out. You keep hoping for a reversal of luck. You are of-course worried about the current losses but you are even more afraid of losing out in case you sell and price really does shoot up. Fear of loosing profits is sometimes as serious as fear of plain losses. In trading parlance solution to this is straight forward. Once your analysis warns you of a loss that can grow bigger you get out. If it reverses afterwards that is part of the game. You may loose some profit 5 times but other 5 deals will save you from catastrophic losses. This though does not advocate running from losses every time. If trade has just begun and goes against you, run fast but if you have made some profits and you are loosing, you give it more leeway.

Take a pause here and try applying this principle to your experiences and you will feel the uncanny insights it provides. Friendships, relationships, belongings, baggage from the past and plans for the future everything will be seen in a new light.

You meet a new person and feel uncomfortable, try to avoid him/her next time but if he is a old friend and some misunderstanding develops, give it some time to sort out. But if situation continues to deteriorate in spite of your sincere efforts, be ready to wish the friend luck and move on. 

You carry some bad memories from your past. (everyone does) They are useful so far as they guide you away from dangers but situation changes and now they are just pulling you back. Time to get rid of them is 'as soon as possible'.

Like everyone else you have some future plans. Some part of these plans could even be day dreams at present. That's all right. But sometimes your plans start to feel absurd and yet instead of abandoning them, you become ever more fanatical about them. That is the time to slip out of the noose. Ironically this includes your plan to earn money from stock market. If you are failing constantly, you either change tactics, take a break to learn more or get out .

Third very interesting skill to learn from stock market is to 'Learn'. Learning never stops in trading till you stop trading. Each trade whether failure or success is a opportunity to learn. They together reveal to you what suits you and what does not. You are honing your skills with every trade. This zeal, this curiosity for new learnings also makes life interesting and worthwhile. Whenever I had lost this zeal I was a dead man walking. I can directly subtract those days from my life and loose nothing of value.

I have a strong doubt that the ratio of successful people to failures in life also could be same as the stock market. Because ultimately markets are made up of people. If we avoid the narrow versions of success and apply true definition, not more than 10% will be considered successful.