1. OPTIMISM – It all starts with a hunch or a positive outlook leading us to buy or sell. 

2. EXCITEMENT – Things start moving our way and we get excited. We start to anticipate and hope that a possible success story is in the making. 
. 
3. THRILL – The market continues to be favorable and we just can’t help but start to feel a little “Smart.” 
At this point we have complete confidence in trading system. 

4. EUPHORIA – This marks the point of maximum financial risk but also maximum financial gain. Our investments turn into quick and easy profits, so we begin to ignore the basic concept of risk and now start trading anything that we can get our hands on to make a quick buck. 

5. ANXIETY – Oh no – it’s turning around! The markets start to show their first signs of taking your “hard earned” profits back. But having never seen this happen, we still remain ultra greedy and think the long-term trend is higher. 

6. DENIAL – The markets don’t turn as quickly as we had hoped. There must be something wrong we think to ourselves. Our “long-term” view now shortens to a near-term hope of an improvement. 

7. FEAR – Reality sets in that we are not as smart as we once thought. Instead of being confident in our trading we become confused. At this point we should get out with a small profitand move on but we don’t for some stupid reason. 

8. DESPERATION – All gains have been lost at this point. We had our chance to profit and missed it. Not knowing how to act, we attempt to do anything that will bring our positions back into the black. 

9. PANIC – The most emotional period by far. We are clueless and helpless. At this stage we feel like we are at the mercy of the market and have absolutely no control. 

(more…)

A mathematician, an accountant and an economist apply for the same job.
The interviewer calls in the mathematician and asks “What do two plus two equal?” The mathematician replies “Four.” The interviewer asks “Four, exactly?” The mathematician looks at the interviewer incredulously and says “Yes, four, exactly.”

Then the interviewer calls in the accountant and asks the same question “What do two plus two equal?” The accountant says “On average, four – give or take ten percent, but on average, four.”

Then the interviewer calls in the economist and poses the same question “What do two plus two equal?” The economist gets up, locks the door, closes the shade, sits down close to the interviewer and says “What would you like it to equal?”

1. Foolish traders confuse hindsight with trading. They think that because they reviewed price performance history, and saw patterns or results, trading in real time would be simple . They don’t understand that real time trading involves risk management, discipline, and a developed trading plan and probably never will.
2. Foolish traders believe that what they learned in textbooks will make them great traders. They are used to being able to supply the ‘right’ answer for a good grade, but the markets are a moving target, and the right answer changes daily.
3. A foolish trader thinks that trading real money in an actual account, followed by a sustained track record, isn’t required. Developing a plan, practicing, and learning from wins and losses is the only way.
4. A foolish trader’s opinions and theories have no basis in reality when trading six figure or multimillion dollar accounts.  ‘In theory, there is no difference between theory andpractice. But in practice, there is.” – Yogi Berra
   
5. Foolish traders make blanket statements like “Day trading doesn’t work.” When they should be saying: “Day trading doesn’t work, for me.” -Richard Weissman.
6. Foolish traders come into social media trying to be teachers when they should be students. They don’t even know what they don’t know.
7. Foolish traders have a recency bias. They think that what works in the current market environment is what will always work.
8. Foolish traders develop too much confidence before they have built competence, and that never ends well.
9. Foolish traders  have made up their mind and cannot be swayed. This is the opposite of successful traders who remain curious, always seeking to learn and grow in all areas of life.
10. A foolish trader has no need to interact with other traders, read books, or learn from more experienced traders. In their mind, they already know everything.