Traders on their journey of trading must have realized that Trading is difficult to make easy money. The trader deals with many issues like understanding the market structure, developing the required skill, psychological barriers, and time constraints. Adding further to the list which is highly overlooked, is the problem of plenty and the problem of too much narrow concentration. On this note, the plot is based on the problem of plenty and how to deal with it.

1. Market Universe:

Many of us operate in a market in an unstructured way. The market is very wide and there are lots of moving factors that are difficult to harmonize. We try to chase the entire market, and as a result of that, we get lost without realizing it.

In order to get water, we need to dig in the same direction. Trading is all about judgments on the back of some theories or methods but the fact of judgments is, that it improves when we practice in a concentrated way.  In the context of a market, we need to fix our universe and need to practice that. For Example, We took Nifty 100 as the Universe, so only 100 stocks become an entire market for us and we have to practice these stocks in a concentrated way. Once we practice on the same set of stocks over a period of time, it helps to improve judgments. Of Couse, with time, one can expand the universe but it has to be finite in nature.

2. Selection of tools:

The problem of plenty lies over here as well. We have many theories, tools, data points, oscillators, and many more things to do analysis but less is more. Trying to Know too many theories and ways of analysis can dilute effectiveness. As a stepping stone, one can focus on price action because it is based on many other theories, or with an understanding of price action, other tools can be used in a better way. Many practitioners restricted themselves only to price action. Here, Price action means dissecting the charts and understanding the structure of price movement.

3. Feedback Mechanism:

One of the unrealized demerits of unstructured analysis is, that we do not have feedback on our studies. When we operate in fix market universe, it gives us an edge to keep on reconciling earlier studies or views in the current context of the market. Feedback is very important to enhance the learning curve. 

4. Homework:

Just Imagine, Hunter, running after prey to catch it. How funny it sounds but this is what we are doing exactly in the market. Market and stock price movements are major decision-driving factors for trading, it is the same as we are running behind prey. Ideally, Hunter set their traps and waits for prey to fall into them. In the market also, we need to be prepared with our homework like understanding the strength, sector, and stock-specific movement. The strength and quality of homework improve when we have practised and analyzed the same stocks for a good period. After the homework, we need to see whether price movement validates our view or not, and based on that we take or avoid the trade idea.   

So these are 4 formats within the framework to enhance the quality of our research and trading. The last point to share is… To operate effectively in the trading environment, we need rules and boundaries to guide our behaviour.