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The Power of Regret

  
  Education
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Everyone knows that chasing price is usually not beneficial, we either end up catching the move too late, or we get poor trade location, which makes it more difficult to manage the trade.

However, there are other forms of chasing that are just as common, maybe more common, and just as counter-productive.   As a trading psychologist I see these all the time.

Traders who are not profitable are often too quick to chase after new set-ups and indicators, or a different chat room, if that’s your thing.  Obviously, we need to have a trading edge, whether it is from the statistical perspective of a positive expectancy, or simply the confidence in a particular discretionary strategy such as tape reading, following order flow, market profile, etc.

Chasing a trade is the fear of missing out. The fear of missing out is associated with various emotions, including regret. In my work with traders and in my own trading, I’ve seen the incredible power of regret. There’s a lot of talk about fear and greed in trading, but the power of regret is often overlooked. Some of my own worst trades, and those of my clients, often have a ‘regret from missing a prior opportunity’ component. When I finally finish my book on the psychology of financial risk taking, I will include much about this overlooked but very powerful emotion.

Somewhat related to chasing a trade, is impulse trading.  They both have in common the underlying feeling of the fear of missing out.  It’s tempting for me to talk about impulse trading here, but it really deserves its own piece.

20 Wisdom Points for Traders

  
  Education
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(1)  Be faithful & honest with yourself in your trading, be diligent & consistent & it will bring you Prosperity.
(2)  Those who work their plan will prosper, but those who chase fantasies lack judgment.
(3)  Steady plodding brings prosperity; hasty speculation brings poverty.
(4)  Those who want to do right will get a rich reward. But those who want to “get rich quick” will quickly  fail“.
(5)  Trying to “get rich quick” is wrong & leads to poverty.
(6)  Wealth taken from gambling quickly disappears; wealth from diligent effort & hard work grows“.
(7)  Follow the rules & keep your financial life intact; ignoring them means financial ruin.
(8)  A person without self-control is as defenseless as a city with broken-down walls.
(9)  The wise control their temper.  They know that anger causes mistakes.
(10)  The intelligent are always open to new ideas, in fact they look for them. (more…)

Some days you feel as if you can do no wrong no matter how stupid u are .Without Trading levels -Strategy :Don't Trade

  
  Education

90% or More Traders do same ………….What she is Doing ?Just Don’t Know Trading levels /Strategy and Trade Daily 

Forget about Creating Wealth ,U will not able to Mint Money -It’s Open Challenge

Remember one Thing :U are Wasting Your Precious Time & Money if u not earning ,Don’t worry about Blue Channels-They Mint Money from Companies/Manipulation during Trading season /Advertisement.

Your Broker Minting Money :By Taking Brokerage ,GOVT Minting Money from TAXES.

21 One Liners For Traders

  
  Education
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  1. It is possible to see that a market is dramatically overbought and prepare for, and then capture, huge gains after the sell off.
  2. Risk small amounts to make big profits.
  3. Bet against times when numerous leaders must agree.
  4. Long hours and a strong work ethic are keys to being a successful trader.
  5. While it is good to trade any market that will turn a profit, specializing in a market can lead to great success.
  6. The markets go down faster than they go up.
  7. If the market will not go down during bad news, it will likely go higher.
  8. The stock market moves in patterns and in cycles. Past price patterns repeat themselves due to human emotions.
  9. Many times traders think a big position order size means that a whale knows something, most times they do not. 
  10. It is okay to skip a trade if you can’t get your entry price.
  11. A momentum move does not just stop, it takes time to roll over.
  12. It is possible to trade successfully by gaming the actions of other traders.
  13. Be aggressive at high probability moments.
  14. Always stay in control of your trading and manage risk.
  15. Focus on risk management as the #1 priority in trading.
  16. Having the right mindset during a big loss that it is just temporary, is the key to coming back and being successful.
  17. Letting profits run is sometimes a great plan.
  18. Being long at all time highs in the indexes is a great strategy.
  19. Great money managers trade with passion.
  20. Even Market Wizards have doubts about winning when entering a trade. 
  21. When the top in a market is reached,  there is a lot of money to be  made shorting as panic selling sets in. 

Top Ten Side Effects of Greedy Trading

  
  Education
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  1. Greed causes the trader to only look at the best case scenario for profits and ignore the worst case scenario for losses in every trade.
  2. Greedy traders trade WAY to big a position size.
  3. A Greedy trader’s #1 priority is getting rich quick while ignoring the risk of ruin.
  4. Traders that are greedy tend to believe they can have returns bigger than the best traders in the world right at the beginning.
  5. Greed makes traders have absurd targets for their trades.
  6. Greedy traders tend to buy stocks that are down 50% believing they will double and go back to where they were.
  7. Greed distorts a trader to focus on the money not the homework involved to make the money.
  8. Traders take trades where the odds are way against them because of the greed of wanting to make huge returns on one trade. (Far out of the money options)
  9. Greedy traders trade with no plan and no method they are just pursuing profits randomly.
  10. Greedy traders are always looking for the easy path to money not to the real path of hard work and experience.

The market is both carrot & stick

  
  Education
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Over the past year of my trading life I have identified several interwoven cycles of learning. The most obvious being that knowledge and practice combine into your overall understanding. Knowledge alone (book learning) does not equate to understanding – you also need to practice in the market. The two combined give you what we generally call experience. Experience seems to be the thing that makes the difference. Someone who has experience tends to do better over someone who has no experience, in any field. If you were having brain surgery, would you rather have a surgeon doing it who has experience or no previous experience? Yeah, enough said.

So over time, our understanding increases (our experience). But you may also notice that your ability to act on what you know seems to lag far behind, and this can be incredibly frustrating and puzzling. Don’t you wonder at it, every time you make the same stupid mistake over and over? Whats going on here?

The fact is that we have two brains (more actually, but lets stick to two for now) – an intellectual brain and an emotional brain. In the East, there is a common analogy of rider and horse. The horse (emotional brain) is stupid and only knows such things as fear, hunger, punishment and reward. The horse understands the difference between a carrot and a stick, but not much else. The rider struggles to make the horse go where he wants to go.

This is our problem in trading. Our emotional brain (the horse) understands fear and greed, and unfortunately these fight or flight level of instincts are stronger (and faster) than our intellectual brain; they have to be. If a mugger jumps out of the bushes you don’t have time to decide if its a mugger or your friend playing a trick on you, you just run.

In the market however, this mechanism is the cause of all our woes. The market provides both a carrot and a stick. A sudden break out (carrot) lures us into buying long, and then suddenly reverses and stops us out (stick). We are lead all over the charts in a random walk, one minute its carrot, the next minute its stick; we are the dumb money.

Who then is the smart money? Surely based on the above it is simply those individuals who can actually control the horse and act according to a trading plan. There is no conspiracy by the major institutions to steal your money from you – you simply hand it over to them or other traders (and they happen to be willing to take it). In the case of the smart money, the rider is in charge, but in the case of the dumb money the horse goes where ever his instincts take him, and the rider simply hangs on (until he falls off that is).

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