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Emotions and Behaviors in Trading

  
  Education
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Successful trading requires the individual to have more than a certain amount of control over emotions and behaviors.
Emotions may include, but not be limited to, the following items:
1. Anger, anxiety, confusion, depression, disappointment, exhilaration, frustration, insecurity, passion, satisfaction, etc.
Behaviors may include, but not be limited to, the following items:
2. Arrogant, consistent, controlling, denial, following through, [im]patient, [ir]rational, letting go, perseverance, stubbornness, tenacity, etc.
Having control over these and other emotions and behaviors will allow for the trader to execute trades objectively, and more importantly, according to a strategic plan.

Sounds easy enough, does it not? “Execute trades objectively, and more importantly, according to a strategic plan.” Being that traders are human, it is not such an easy task to accomplish. It is not easy to be objective and diligent about sticking to a strategic plan day after day after day – especially with the constant volatility and erratic dynamics of the market tempting and enticing you at every turn to take actions that are NOT necessarily objective and NOT necessarily part of the strategic plan.

GAMBLING ADDICTION with trading

  
Economy, Education
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how many of you never seem to win consistently?

how many of you hold on because you did have some winning days which means you have potential?

how many of you tell yourselves that its not an addiction,its just a passion you have?

how many of you keep on replenishing your trading accounts because just like any business,you always lose money at the start?
how many of you tell yoursleves your losses are the BEST THING that ever happened because thats the best way to learn?

how many of you think of crafty ways to get some extra money wired into your trading accounts?

how many of you say you would have won if you only “stuck to your discipline”?

how many of you are just waiting FOR THAT SPECIAL DAY WHEN EVERYTHING FINALLY CLICKS AND YOU’VE FINALLY FOUND THAT EDGE?

how many of you fall into a depression and feel as if someone has hit you in the heart with a hammer aftr a big loss.

how many of you cannot wait for the next day to make some money back?

my favorite: “tomorrows a new day and i will start fresh, a new trading style that will be disciplined”.

there are many guys that make lots of money trading for a living..really,you seriously believe that?

A Trading Psychology Checklist

  
  Education
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How do you know if your trading psychology problem is really just about trading or is a sign of larger problems? Here is a quick checklist:
A) Does your problem occur outside of trading? For instance, do you have temper and self-control problems at home or in other areas of life, such as gambling or excessive spending?
B) Has your problem predated your trading? Did you have similar emotional symptoms when you were young or before you began your trading career?
C) Does your problem spill over to other areas of your life? Does it affect your feelings about yourself, your overall motivation and happiness in life, and your effectiveness in your work and social lives?
D) Does your problem affect other people? Do you feel as though others with whom you work or live are impacted adversely by your problem? Have others asked you to get help?
E) Do you have a family history of emotional problems and/or substance use problems? Have others, particularly in your immediate family, had treated or untreated emotional problems?
If you answered “yes” to two or more of the above items, consider that you may not be alone. More than 10% of the population qualifies with a diagnosable problem of anxiety, depression, or substance abuse. Tweaking your trading will be of little help if the problem has a medical or psychological root. A professional consultation if you answered “yes” to two or more checklist items might be your best money management strategy.

Perfectionism

  
  Education
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Trading is not about perfection. It is about probability and progress. All charts, analyses (fundamental and technical) and trading plans are built on probabilities.

Why then, do so many traders strive for perfection? Why do so many traders miss trades, waiting for exactly the right entry and then beat up on themselves when it doesn’t come and the position runs away while they sit there scratching their heads and condemning themselves?

Why are so many traders trying to turn a game of probability into one of 100% certainty?

The answer lies in one of the cardinal sins of trading which is PERFECTIONISM.

Perfectionism can be a great help to people in many professions, but can be fatal to a trader. Perfectionists, always trying to find the Holy Grail of trading go from one service to another, from one system to another, looking for a way that they can be right all the time. YES! Now, I found it. It’s this trading room, or this service, or this indicator! Wait… something is wrong here. Not all of these trades are working and I have draw downs! How can it be that this particular method failed and I actually had to take a loss? Must be something wrong. I will try harder and look for an even better system, a more expensive service, a new and improved guru, some absolutely no-fail software so that I can have ONLY WINNING TRADES. (more…)

5 Emotional Stages of a Loss

  
  Education
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Stage 1: Denial
This is when you have the first sign of a loss. However, you justify this loss. You deny it’s true form and decide that it could be a winner…but you just have to “wait it out.” “Afterall, I bought a lot of time on my option.”
Stage 2: Anger
The loss judt got worse. Now you look to place blame. Freakin’ blog! I hate the marketcast anyway!!! Why didn’t I do my own analysis????

Stage 3: Bargaining
If somehow this stock can move in your favor, you promise you won’t do it again. Or even worse, you start to think of ways to salvage. Desperation sets in.
Stage 4: Depression
It couldn’t get worse huh? WRONG! Now this makes a huge mark on your account, your spouse is going to kill you, it is going to take forever to make it back, and you start to panic.
Stage 5: Acceptance
Alright, I will take the loss.

Felix Dennis on Mistaking Desire for Compulsion

  
  Education
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  • Wishing for or desiring something is futile without an inner compulsion to achieve it. Such lack of compulsion, if not frankly acknowledged, can lead to great personal unhappiness. We have all met deeply unhappy souls muddling along in professions or careers for which they are patently unsuited.
  • Worse still, by continually wishing and never delivering, you risk denting your confidence, beginning a vicious downward spiral that appears to draw misfortune like a magnet. The assumption that you might be able to achieve some goal if you only wish hard enough is not just a f***-up. It’s a potential personal tragedy.
  • Consider very carefully whether you are truly driven by inner demons to be rich. If you are not, then my earnest and heartfelt advice to you is: do not on any account make the attempt. What are riches anyway, compared to health or the peace of mind that even a modicum of contentment brings in its wake? In and of itself,great wealth very rarely, if ever, breeds contentment.
  • But no condescension is intended whatever when I ask you to quietly turn over in your mind whether or not you are fit to be rich. Whether the sacrifices involved — not only your own, but those you will ask of your family, present or future — are worth the tyranny that such ambition, by its very nature, exacts.
  • ‘Better to have tried and failed than not to have tried at all,’ drones the old saw. But in this instance, the cliche is wrong, utterly wrong. Better to have chosen a different life, a quite different path, than have placed yourself and those you love in harm’s way when early reflection and thought could have advised you differently. I repeat: do not mistake desire for compulsion. Those that do nearly always fail, at great cost to themselves and those around them.

ECB Purchases Of Sovereign Bonds Surge Tenfold Compared To Prior Week, Hit €1.4 Billion

  
  Education
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After dropping to a modest €134 million last week, ECB purchases of sovereign debt exploded tenfold in the last ended week to €1.384 billion, confirming that the ECB continues to bid up all Portuguese and Irish bonds available for sale, so the market does not crash. As Reuters notes, this is the highest weekly amount purchase since early July. Once again it is up to the European Fed-equivalent to be the buyer of only resort. And Europe’s continued central bank facilitated life support comes on the heels of the latest joke in recession timing: per Dow Jones, the Center for Economic Policy Research Monday said its Euro Area Business Cycle Dating Committee had determined that the currency area’s recession began in January 2008 and ended in April 2009, lasting a total of 15 months and reducing gross domestic product by 5.5%. Some recovery there, when half the PIIGS have no access to capital markets, have their Prime Ministers mocked during conference calls, and are fighting with an exchange rate last seen long before Greece, Portugal, Spain and Ireland had to be rescued. We wonder what the CEPR’s timing on the end of the European depression will end up being?

The 5 Emotional Stages of a loss

  
  Education
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Stage 1: Denial
This is when you have the first sign of a loss. However, you justify this loss. You deny it’s true form and decide that it could be a winner…but you just have to “wait it out.” “Afterall, I bought a lot of time on my option.”

Stage 2: Anger
The loss judt got worse. Now you look to place blame. Freakin’ blog! I hate the marketcast anyway!!! Why didn’t I do my own analysis????


Stage 3: Bargaining
If somehow this stock can move in your favor, you promise you won’t do it again. Or even worse, you start to think of ways to salvage. Desperation sets in.

Stage 4: Depression
It couldn’t get worse huh? WRONG! Now this makes a huge mark on your account, your spouse is going to kill you, it is going to take forever to make it back, and you start to panic.

Stage 5: Acceptance
Alright, I will take the loss.

Felix Dennis on Mistaking Desire for Compulsion

  
Analysis, Education
#  #  #  #  #
  • Wishing for or desiring something is futile without an inner compulsion to achieve it. Such lack of compulsion, if not frankly acknowledged, can lead to great personal unhappiness. We have all met deeply unhappy souls muddling along in professions or careers for which they are patently unsuited.
  • Worse still, by continually wishing and never delivering, you risk denting your confidence, beginning a vicious downward spiral that appears to draw misfortune like a magnet. The assumption that you might be able to achieve some goal if you only wish hard enough is not just a f***-up. It’s a potential personal tragedy.
  • Consider very carefully whether you are truly driven by inner demons to be rich. If you are not, then my earnest and heartfelt advice to you is: do not on any account make the attempt. What are riches anyway, compared to health or the peace of mind that even a modicum of contentment brings in its wake? In and of itself,great wealth very rarely, if ever, breeds contentment.
  • But no condescension is intended whatever when I ask you to quietly turn over in your mind whether or not you are fit to be rich. Whether the sacrifices involved — not only your own, but those you will ask of your family, present or future — are worth the tyranny that such ambition, by its very nature, exacts.
  • ‘Better to have tried and failed than not to have tried at all,’ drones the old saw. But in this instance, the cliche is wrong, utterly wrong. Better to have chosen a different life, a quite different path, than have placed yourself and those you love in harm’s way when early reflection and thought could have advised you differently. I repeat: do not mistake desire for compulsion. Those that do nearly always fail, at great cost to themselves and those around them.

Perfectionism

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

perfect-aTrading is not about perfection. It is about probability and progress. All charts, analyses (fundamental and technical) and trading plans are built on probabilities.

Why then, do so many traders strive for perfection? Why do so many traders miss trades, waiting for exactly the right entry and then beat up on themselves when it doesn’t come and the position runs away while they sit there scratching their heads and condemning themselves?

Why are so many traders trying to turn a game of probability into one of 100% certainty?

The answer lies in one of the cardinal sins of trading which is PERFECTIONISM.

Perfectionism can be a great help to people in many professions, but can be fatal to a trader. Perfectionists, always trying to find the Holy Grail of trading go from one service to another, from one system to another, looking for a way that they can be right all the time. YES! Now, I found it. It’s this trading room, or this service, or this indicator! Wait… something is wrong here. Not all of these trades are working and I have draw downs! How can it be that this particular method failed and I actually had to take a loss? Must be something wrong. I will try harder and look for an even better system, a more expensive service, a new and improved guru, some absolutely no-fail software so that I can have ONLY WINNING TRADES. (more…)

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