Most overrated and underrated things in trading

Daksh Murkute | | |

So there are lots of things in trading that is overhyped by people for various reasons and on the other hand, there are things that people just don’t talk about at all and I don’t understand why.


These things often end up making beginners go in the wrong direction which only leads to a pitfall and maybe that’s just why 90% of the traders fail.


Now, in this blog post, I’m going to talk about some overrated and underrated things in trading and you might be shocked upon reading some of the things in it.


But I can tell you this, once you read this blog post, you’ll get in touch with the reality of trading and you’ll know what matters most and what’s not that a big thing as it’s said to be.




I’ll first start with the overrated things and then I’ll move on to the underrated things in trading.


In the overrated things, you’ll see that it includes things that seemed to make trading a fun kind of a thing and you’ll also understand why those particular things are overrated.


While in the underrated things you’ll see that it includes stuff that’s considered to be boring by most of the traders, but these are the things that work.


Read all points with an open mind and be ready to unlearn things and learn new things. It will take you a long way in this business and I can say that with confidence.



Overrated things in trading

1. Win rate


Overrated things in trading - Win Rate


“Seriously Daksh? Win rate is overrated in trading?” I’m sure you might have thought that too and I’ll agree that this is a controversial take, but still, hear me out.


Almost every trader that I have come across has this serious obsession over win rate and they just want to be right all the time. But tell me, are you going to be right all the time? No right!


See, there’s nothing wrong in aiming for a high win rate but that shouldn’t take you away from the fact that losing is a part of the game.


Another thing that I wanted to talk about is that the win rate in itself isn’t whole. What I mean is that you shouldn’t only look at win rate alone, but you should look at win rate along with risk to reward ratio. There’s no point in having a high win rate if your RRR is poor right.


That’s why win rate alone is a very overrated thing in trading and the risk to reward ratio is kind of underrated. You should know what to focus on more and how.


I have a complete blog post on this topic and you should really check that one out to learn more about it.



2. Beach trading lifestyle


Overrated things in trading - Beach Trading Lifestyle


You’ll see lots of traders on Instagram and YouTube flaunt their beach trading lifestyle where they’re sitting by the beach and trading on their laptops or phones.


This is just not practical and even if you do manage to do it, it is not at all sustainable, and I’ll rate this as completely overrated.


This type of lifestyle is pushed only so that beginners are lured into buying courses and signals of these forex gurus and it’s just a scam.


By having this mindset, traders are just taking trading easy and casually. I mean, will you see any other finance professional doing their work all the time from the beach? No right.


It’s about being serious about what you do and not trying to look cool on social media. But unfortunately, lots of beginner traders these days don’t understand this.



3. YOLO lifestyle


Overrated things in trading - YOLO Lifestyle


Another thing related to the  mindset that has become more of a fad lately among beginner traders.


I have been coming across many traders that trade with the mindset of risking super high to earn super high returns and if anyone asks them why aren’t they managing risk then they just say YOLO.


This is another example where people just aren’t taking trading seriously and it is so frustrating to me personally.


This YOLO trading lifestyle may seem cool and thrilling but let me tell you that without risk management you will only be blowing up accounts after accounts.


Trading is not supposed to be thrilling and if you’re looking for something like then find something else to do. Believe it or not, trading is kind of boring but still we traders keep going on because we know what it can do for us.



4. Absolute returns


Overrated things in trading - Absolute Returns


You’ll come across many traders boasting their PnL and they’ll say that they earned this much money and that much money, but you know what, this thing of absolute returns, is kind of overrated too.


I know I know you might be thinking that how earning money is overrated and I’ll just tell you to read this with an open mind.


But tell me this, is it impressive enough to earn $10,000 in one month but then lose money in all the other months? No right.


That’s why I said that absolute returns are overrated and this is where the thing of consistency comes in, which is very much underrated you know.


Earning money is a great thing but you need to be earning money consistently over time to actually claim the bragging rights.


Well, lucky for you, I already have uploaded an entire blog post on this particular topic, so read that one too if you want to know more.



Underrated things in trading

1. Living to trade another day


Underrated things in trading - Living To Trade Another Day


No this isn’t any James Bond movie title and is just a cool way I came up with to talk about risk management.


I have said this time and again and will say it again, risk management is a holy grail and also the only holy grail in trading. So, if you are bad at risk management then you will fail as a trader.


As I said at the beginning, underrated things are considered to be boring by many traders but these are the things that work and that will get traders to the success they are aiming for. Risk management is one such thing.


I mean it’s so easy to manage risk. All it takes is a stop loss and position sizing and boom, you have protected your trade’s downside and also protect your capital in case the price moves against you.


Even though it’s easy, traders don’t follow it, and it’s sad to look at their capital getting blown up.


As I said in the overrated part, there are many things that look cool to do, but please don’t fall for that stuff and deviate from the basics of trading.


Risk management is one of the basics and the most important part of trading yet it is very underrated, unfortunately.



2. Good decision making


Underrated things in trading - Good Decision Making


Tell me one thing, aren’t traders making decisions about all sorts of things while they are trading? We have to decide whether to take the trade or not, when to take it, where to enter, where to get out, etc.


That’s why good decision making is so important in trading that it can literally make or break your trading. But, this skill of good decision making, is very much underrated.


You’ll hardly come across traders giving it the importance it deserves and in fact, many traders don’t even know in the first place that this is an important part of trading.


Anyways, since you have landed upon this blog post and have now read that decision making is an underrated thing in trading, I want you to work on this skill and become a better trader.


You can check out the blog post I have uploaded on this very topic of decision making and you’ll learn how to start making better decisions and succeed.



3. Strategy testing


Underrated things in trading - Strategy Testing


How are you going to know if the strategy that you’ve found, is worth trading or not? The answer is simple, by testing the strategy.


I’m talking about backtesting here, which is another underrated thing in trading.


I cannot stress enough how important backtesting is in trading. I personally backtest my strategy extensively before I use it any further.


Like this VWAP strategy that I came up with, I made sure that I backtested this strategy for at least 100 trades, and then only I shared it on my blogs and YouTube videos.


I think that the reason for this being underrated is that firstly, people just don’t understand its importance and secondly, people are just lazy to put in the work for it.


I just don’t want you to be like that and I’d suggest that you check out this blog post I have uploaded on backtesting and you’ll understand why you need to put in the time to backtest any strategy you come up with.



4. Patience


Underrated things in trading - Patience


I wanted to save this one for the end as it’s that important and probably the most underrated thing in trading.


Have you ever had those days where you are sitting in front of the charts but aren’t getting any good trades to take? Well, what you do in such situations defines you as a trader.


If you act out of impatience and just start taking trades for the sake of it, then you are a bad trader. But, if you manage to fight the impatience and waited to act only when a good opportunity comes, then you my friend, are going to go a long way ahead.


Anyways, if you are serious about trading and want to make it big in this business, then you should seriously start considering working on developing this vital skill of having patience, or else things are going to get difficult for you out there.



What do you think?

So these were the overrated as well as the underrated things in trading. If there’s anything you’d like to add to either list, do let me know.


Also, be honest and let me know if you too are guilty of giving more importance to the overrated stuff and did not pay much heed to the underrated stuff.


Do share this blog post with others and let them also know what they should be focusing on and what doesn’t deserve their entire focus in trading.


Feel free to reach out to me for absolutely anything through the comments section below and I’ll make sure to get back to it at the earliest.

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