Confidence can be an important psychological tool for the trader – important enough to make the difference between a winning trade and a losing trade. When you develop your trading plan, it is obviously important that you have confidence in its accuracy and usefulness and in your belief that you can follow your plan closely and execute it successfully.
Often, traders fall into a mental “I know it all” trap, where they use their confidence to nurture their ego instead of using it to be appropriately decisive in their trading and investing decisions. Such misplaced confidence can be crippling to trading success, because any potential influence from the environment (media, others’ opinions, etc.) that could sway the trader from sticking to his trading plan will have far more power. When a trader is caught in this type of trap, his ability to question his opinions and ideas diminishes. If his initial reaction to a suggestion is to accept it, he loses the capacity to question his acceptance; and if his initial reaction is to disagree, then he loses the capacity to question his disagreement, which can cause even the slightest suggestions from news, colleagues, and other influential sources to be magnified in the trader’s psyche. (more…)
Archives of “ego” tag
rss5 Thoughts for Traders-Must Read
1. We want all trades to be winners. The foolproof system for trading profits is attractive and the seller of such systems can be convincing, yet the profits are elusive. The market could care less about our system, a past trading record, or the trading record of the one selling the system. You do know that the market’s attorney requires that the following be posted in a prominent place…like on our foreheads beside the big L sign!: “Past results are not indicative of future returns.” By the way, the market says, “you’re doing it wrong”.
2. We want to add to losers. The last time I checked the only reason we add to a loser is when the discussion is about our weight! Get on the scales and add up more losing pounds! Be the BIGGEST LOSER! The market, however, says the way to tip the scales in our favor is to add to the winners and lighten up on the losers. To do otherwise is to “do it wrong”.
3. We want to be right. Two wrongs don’t make a right in life but in the stock market two wrongs (and plenty more) will help you get on the right road to making money. The market says the trading game is about making money not about stroking the ego. The “right” road is the “wrong” road when your on Wall Street. Hey, if you doing it to be right, then you’re “doing it wrong!” (more…)
100% You will lose Money
| You are entering a position out of EMOTIONS or ANTICIPATION at wrong price level in a WRONG scrip with GREED or HOPE with no pre-entry exit in the place – even worst, once in a trade, riding the position with HOPE without STOP LOSS even if it goes against the entry – adding more to average down in the entirely wrong trade – at last running out PATIENCES and out of FRUSTRATION booking huge LOSS. Even the position is in PORFIT there is no STOP LOSS or pre-entry EXIT in place – exiting the position abruptly in FEAR booking just a small profit with FEAR that market may take this small profit too – these random small profits unable to compensate earlier big losses! To cover big losses you try more and more RANDOM trades and above process continues – end result it challenges your EGO and creates more FEAR, more AGONY – cycle continues with small profits and big losses – until account is wiped off. |
Trading Quotes
Human emotion is both the source of opportunity in trading and the greatest challenge. Trade with an edge, manage risk, be consistent, and keep it simple. Good trading is not about being right, it’s about trading right. Trading with an edge is what separates the professionals from amateurs. Edges are found in the places between the battleground between buyers and sellers. Mature understanding of and respect of risk is the hallmark of the best traders. Ruin is the risk you should be concerned with the most. Don’t spent all your time admiring the fancy tools in the magazine. Keep it simple. Simple time-tested methods that are well executed will beat fancy complicated method every time. Trading with poor methods is like learning to juggle while standing in a rowboat during the storm. Sure, it can be done, but it is much easier to juggle when one is standing on a solid ground. Trading is not a sprint; it is boxing. The market will beat you up, screw with your head, and do anything it can to defeat you. But when the bell sounds at the end of the twelfth round, you must be standing in the ring in order to win. The market does not care how you feel. It will not prop up your ego or console you when you are down. I always say that you could publish my trading rules in the newspaper and no one will follow them. |
Fear of failure
Don’t worry about perfect.
The easiest way to fail the first time is trying to be perfect. In the beginning, understanding how different the experience is from how you imagined it is important. Start with reasonable expectations and over time shift to unreasonable expectations.
Seeing others do it.
At the beginning you believe you will be successful. After your expectations for success are not met, your belief fades. Surround yourself with as many people who are successful. Seeing is believing. You will begin to notice some of the little things that they doing. The difference between good and great, I have found, is in those little things. (more…)
The Price and Ego
Technicians seem to be more willing to accept a small loss generated by the trading system than fundamental traders. Traders must accept the assumption that the markets reflect the true reality. Our pride and opinions should not interfere with sound trading approaches.
The Ten Cardinal Rules
1. Learn to function in a tense, unstructured, and unpredictable environment.
2. Be an independent thinker versus a conventional thinker.
3. Work out a way to handle your emotions and maintain objectivity.
4. Don’t rely on hope and fear in the conventional sense.
5. Work continuously to improve yourself, giving importance to self-examination and recognizing that your personality and way of responding to events are a critical part of the game. This requires continuous coaching.
6. Modify your normal responses to certain events.
7. Be willing to face problems, understand them, and recognize that they are in some way related to your behavior.
8. Know when problems can be resolved and then apply methods to solve them. That may mean giving up some control in order to gain a different control. It may mean changes in your personality, learning self-reliance, or giving up independence and ego to become part of a trading team.
9. Understand the larger framework in which trading occurs— how the complexity of the marketplace and your personality both must be taken into account in order to develop the mastery of trading.
10. Develop the right mind-set for trading—a willingness to commit to the kinds of changes in personal habits and beliefs that will drastically alter your life. To do this requires a willingness to surrender to the forces of the game. In order to be able to play at a maximum level, you have to let go of your ego and your need to have things your way.
Marty Schwartz- Trading Quotes
The marketplace is an arena and other traders are the adversaries. I turned from a loser to a winner when I was able to separate my ego needs from making money. When I was able to accept being wrong. Before that, admitting I was wrong was more upsetting than losing the money. When I became a winner I went from ‘I figured it out, therefore it can’t be wrong’ to ‘I figured it out, but if I’m wrong, I’m getting the hell out, because I want to save my money and go on to the next trade.’ By living the philosophy that my winners are always in front of me, it is not so painful to take a loss. If I make a mistake, so what! My attitude is: Never risk your family’s security. Whenever you get hit, you are very upset emotionally. Most traders try to make it back immediately; they try to play bigger. Whenever you try to get all your losses back at once, you are most often doomed to fail. After a devastating loss, I always play very small and try to get black ink, black ink. It’s not how much money I make, but just getting my rhythm and confidence back. Before taking a position always know the amount you are willing to lose. The most important thing is money management, money management, money management. Anybody who is successful will tell you the same thing. I always take my losses quickly. That is probably the key to my success. The best advice I can give to the ordinary guy trying to become a better trader is Learn to take losses. The most important thing in making money is not letting your losses get out of hand. |
Avoid EGO in Trading
“Don’t be a hero. Don’t have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead.”
“At other times in the past, investors lost a good profit by holding on too long, trying to get a long-term capital gain. Some investors, even erroneously, convince themselves they can’t sell
because of taxes—strong ego, weak judgment.”
“When did you turn from a loser to a winner?When I was able to separate my ego needs from making money. When I was able to accept being wrong.Before, admitting I was wrong was more upsetting than losing the money.”
“Most traders who fail have large egos and can’t admit that they are wrong.”
“Clearly, flexibility and suppression of ego are key elements of Gelber’s success.”
“Actually, the best traders have no ego. To be a great trader, you have to have a big enough ego only in the sense that you have confidence in yourself.”
Ego can also stop you from being profitable as a trader. Maybe you only like to short because you think this economny is going to H____ and the market rallies for a month and the whole time you try shorting it when you should be buying the pullbacks. In this scenario, the stongly held belief system is affecting the traders ability to see what is really going on and costs either being stopped out, or only making a small profit and missing the big moves etc.
So, the more we can become egoless, flexible in our mind and not have a preconceived direction the market is going in, the better we will be as a trader. (more…)
The best traders have no ego
