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Anyone can get lucky in the short term, only good traders succeed in the long term

  
  Education
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Don’t confuse making money in the stock market with knowing what you are doing. It is easy to get lucky on a stock or on a sector and enjoy gains that give credence to your analysis method. However, short term winners often give back all of their gains because they fail to recognize their success as luck.

The Hidden Variable in Your Trading Success

  
  Education
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Most traders realize that trading involves a lot of psychology. And most traders readily admit that a significant portion of their trading losses, or lack of performance, is due to “psychology”.  Although the term ‘psychology’ isn’t always mentioned as an explanation, you can see it easily enough in the following statements ……”I froze just as I was about to pull the trigger”….. ”I hesitated and missed that trade and was so pissed that I got myself into an impulse trade right after”…..  “That large loss was not what I wanted, I held it thinking it would come back because last time I bailed out of this type of trade I got stopped out right before it reversed”….. “I was really nervous about losing money again so I got out of my winning trade way before my target”

Those are four common examples of trading psychology issues manifesting in one’s trading.  Do you recognize yourself in the above statements? (more…)

Fear & Euphoria

  
  Education
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fear-euphoria

It is inordinate “fear” and “euphoria” that prevent us from achieving our investment goals. And, the impact of these excessive emotions can be seen across the spectrum of traders.

  • The beginner who won’t put on a trade until he is certain the next trade will be a winner.
  • The trader who “knows” what the market will do and as a result refuses to exit a losing position.
  • The same trader who ignores market information that is contradictory to his position.
  • The same trader who becomes paralysed with fear – “Dear God, just let me break even! I promise I won’t do it again!”
  • The student who refuses to send in work because he doesn’t want to be told that his hours of work are “wrong”
  • The trader who after a series of wins feels “he’s made it!” …and becomes reckless.

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