PRIDE, HOPE, FEAR & GREED

Geo_88

fwiw---.  repost for newbies PRIDE, HOPE, FEAR & GREED

Pride, Hope, Fear, & Greed -— Our Demons

You can master technical analysis and learn dozens of trading techniques, but if you can’t act in accordance with your own opinions, you will lose money.

All the personal emotions of fear, hope, greed, and our own ego will serve to distort your decision-making process and market timing. A trader’s ego is a double-edged sword. There must be a strong enough ego to motivate the trader to initiate a trade in the first place. Yet, on the other hand, many times this ego can keep a trader from taking losses when he knows in his heart, as well as his head, that he is wrong.
A trader must be able to continue to pull the trigger on trades and avoid making impulsive or sloppy trades where there is no edge. Much of trading is about knowing yourself. The market is a very expensive place to learn who you are. Learn the patterns and times when you get into trouble. Know the situations that are going to draw you into making spontaneous or marginal trades.

Problems arise when the adrenaline starts pumping, and pounding emotion; then the time when bad decisions are made. Pride, Hope, Fear, and Greed are some of the most dangerous psychological traps will ever have to overcome for investing with a plan.

Pride screams to don’t stop your loss!! To prove you are right!! It will end good, just wait.

Hope raises of going to buy a stock, hope for the best, and no good thing ever dies.

Fear advises to go ahead and take your profit quickly, We can be winners run, let’s take the profit(s) now because that profit could reverse, and We end up to a loss.

Greed speaks overconfidence that this trade can’t miss, I am sure it will be a huge winner, bet your whole account? We will be rich —and fast!

Living to Trade Another Day
Never dig yourself so deep into a mental hole that you can’t claw your way back out. Never do so much damage to your account that you have to stop trading for a while. Once you have made back a loss, you know you can do it again. Only by closing your losing trades can you start to heal again. It is very hard to trade well with losses on your sheets. Bad positions will be a noose around your neck and will keep you from putting on the good trades.

If you are frustrated, don’t think about the markets - find a distraction. If you get mad or frustrated, you are apt to make a poor decision.

Concentrate on getting experience. Intuition is just a sum of your experiences. Concentrate on bullding muscle memory and developing situational awareness.

To become consistent, you must control your emotions. The trading game is best played in the abstract. Segregate the real world household and living finances from your trading account. Have some money set aside to live on as well as to enough reserves to get back into the game.

If possible, do not stop trading on a losing trade. Try to make a feel good‚ trade.

Never think about real dollars!

Get the self-talk out of your head. (How do you cut out the internal dialogue? Have a structure, a plan, checklists, and a routine.)

People feel most comfortable in a congestion area, but this is the most dangerous place to play.

Recognize that sometimes the correct trade is the uncomfortable one.

If you can’t pull the trigger or are fighting a losing position, you will finally take action when you get angry enough about it.

Don’t force trades when nothing is happening. Instead, write things down. Doodle, draw, jot down patterns and thoughts, and keep a notebook. Writing with a pen or pencil frees up the mind from too much self-chatter.

Also, know when you are getting burned out. This is the one of the few reasons why a trader should stop making trades for a while. If you are burned out, get out and stay out for a bit.
Take a break. Change the scenery. Walk out of the office. Keep yourself fresh!