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Bhagavad Gita & Trading
  • : January 24, 2021
  • : B. Krishnakumar
 
Bhagavad Gita & Trading
 

 
This is one of the popular quote / sloka from Bhagavad Gita. Many of you might be wondering what this has to do with trading. Be my guest and read along.

As you may recall, I mentioned in the newsletter few weeks ago, about Michael Mauboussin’s interesting book titled “The Success Equation: Untangling Skill and Luck in Business, Sports and Investing” that talks about how each activity and decision we make can be classified into the luck Vs skill bucket.

Investment or trading in stock market has been classified as an activity which involves a high degree of luck. In activities involving a high of degree of luck that influences the outcome, it makes a lot of sense to think long-term and use probabilities to your advantage, says the author.

This is what Mauboussin says with respect to how to change your luck:

The author states that “For activities near the luck side of the continuum, a good process is the surest path to success in the long run” What this means is that if you have a process-oriented approach to trading, then there is a higher chance of being profitable over the long-term or after many trades. But, the outcome of each trade is unknown as it is the case with any activity involving higher degree of luck.

You might have followed the rules and still ended up with a losing trade and you may have flouted rules and by sheer luck that could have yielded tremendous profits.

So stick to the process or the trading system that you have and do not worry about the outcome of the trades that are currently open. And, this is what Lord Krishna in Bhagavad Gita also conveys isn’t it? Have a look now at the image at the top of this article. Lord Krishna says do your duty and do not expect or focus on the outcome. Your duty as a trader is to follow your system or trading plan and not be worried about the outcome of the trade.

If you develop this kind of a detachment from the outcome and focus on the process, trading then will become more stress free and profitable over the long run.

If you do not have a trade plan, then that is the biggest mistake. So, write down a plan before you proceed any further.