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Anxiety and future in the Traders life

anxiety-disorderAnxiety is a future oriented emotion. You never will get anxious about events that have already occurred. Suppose we had been anxious about a trade but now it’s over with profit hit or stopped out. We no longer feel anxiety – only feel nothing, or satisfaction, or remorse, or disappointment, or sorrow, or some other past oriented emotion.

Anxiety communicate a message that there’s something in our future for which we need to prepare. This is a vital, a self-protection message. (more…)

What is Hope ?What is Regret ?

What is Hope?

Hope is a feeling of expectation and desire for a certain thing to happen. It’s an individual’s desire to want or wish for a desired event to happen.

Hope may be the most dangerous of all human emotions when it comes to trading. Hope is what keeps a trader in a losing trade after it has hit the stop. Greed and hope are what often prevent a trader from taking profits on a winning trade. When a stock is going up, traders will often remain in the trade in the “hope” of recouping past losses. Every swing trader hopes that a losing trade will somehow become a winning trade, but stock markets are not a charity. This type of thinking is dangerous because the group (stock market) could not care less about what you hope for, or what is in your best interest. Rest assured, when your thinking slips into hope mode, the market will punish you by taking your money.

What is regret?

Regret is defined as a feeling of sadness or disappointment over something that has happened or been done, especially when it involves a loss or a missed opportunity. (more…)

Controlling your Emotions

Emotions-controlThe fact is, the majority of traders lose because they cannot control their emotions – and their emotions cause them to make irrational trades and lose.

Trading psychology is one of the keys to investment success, but its impact is not understood by many investors, who simply think they need a good trading method, but this is only part of the equation for winning at Stock market  trading.

The influence Of Hope and Fear

In trading psychology, two emotions that are constantly present are:

Hope and fear. One of the traders who recognized this was the legendary trader W D Gann. (more…)

The Psychology of Trading

There is an old saying that the market is driven by fear and greed. Anyone that has placed more than a couple of trades will surely have experienced these two emotions. All traders experience emotion. The distinction between a successful trader and an unsuccessful trader comes down to how they deal with that emotion. Let’s look at how these emotions affect a successful trader and an unsuccessful trader in various scenarios.

You go long and the market immediately goes down – you go short and the market immediately goes up. That’s 2 consecutive losses, and you are getting a little ‘anxious’ so you don’t take the ‘next’ trade. Of course, this trade is a winner. Now to make the situation worse, you then ‘chase’ the move, and as soon as you enter the trade it immediately reverses, thus giving you another loss – this is now 3 in a row. Ok, one more ‘try’ – this can’t happen on every trade can it? (more…)

Greed-Fear-Hope-Regret

1. Greed could be defined as a trader’s desire to trade in order to provide an unrealistic profit. Greedy traders focus only on how much money they could have made. This emotion frequently leads to ignoring proper money management and often prevents a trader from taking profits on a winning trade.

2. Fear is a survival response and probably the most powerful of all human emotions. When afraid, a trader will sell a position regardless of the price. Fear usually leads to panic, which again causes poor decision making.

3. Hope is what keeps a trader in a losing trade after it has hit the invalidation level. It may be the most dangerous of all human emotions when it comes to trading.

4. Regret is defined as a feeling of sadness or disappointment over something that has happened, especially when it involves a loss or a missed opportunity.

The Heart and Mind of Trading

Your heart has a mind, and your mind has a heart. In trading we need to bring heart and mind together. We need to feel intelligently and think with informed emotion.  The mind has intellectual emotion and the heart has emotional intellect.

It has been proven through heart transplants that the heart really does have a mind. Heart transplant recipients take on many characteristics, connections, habits, and hobbies of their donors. One woman who had never cared about dancing began to take ballroom dance lessons six weeks after her transplant. She became fascinated with ballroom dancing and became quite good at it. It turned out the donor of her heart had been a ballroom dancer. One child who had received the heart of another child upon seeing the dead child’s mother cried out, “Mommy, I’ve missed you!” And there are many other such reported instances.

It could even be assumed for the sake of this column, that the entire body, cell structure, and so forth are informed by both mind and heart. This is a column about trading, so let’s look at how mind and heart impact trading. We can start with the metaphors of mind and heart.

What is the heart of your trading? Is it analysis? Is it intuition?  Is it thought corrected by feeling or feeling balanced by analysis? Is it an outside system created by you or someone else that you employ with emotional or thoughtful action?

Do you trade with heart?  Do you put your whole self into it? And does that work for you?

Do you trade with an intellectual detachment? And does that support your chosen results?

What would happen if you brought the two together? What if you traded committed to your heart’s desire but also retained an intellectual remove from immediate results?  What if you committed yourself to replicating a verified and trusted method in the market and retained an optimistic view of the final results even while you observed with curiosity the current unfolding of the market?

We need balance in life and in trading. By bringing heart and mind and even body into the trading, we can seek to bring all of ourselves into the equation. We can do it mindfully with heart and clear purpose.

Confidence in Trading: The Approach

CONFIDENCE01
Have you ever seen a gorgeous goddess?  A woman so magnificent you just are beeming energy inside to go talk to her?  But as you walk over you start to notice how you’re walking, what facial gestures you’re making, where your hands are, confidence fading… You’re becoming self-conscious and that wonderful feeling of excitement has now turned into fear.  Do you remember the last time you talked to a woman in this energy? In this self-conscious / fear mentality?  Didn’t go so well did it?  Why is a stock any different?

It’s all about the approach and mental confidence prior to the trade.  When you approach an event with fear that energy gets transferred into it.  I’ve talked about how The Energy of Fear is Consumption in this prior post.  So if you’re feeling nervous before a trade take note of this.  Where is this fear coming from? Is it related to money? Lack of confidence in yourself? Lack of self worth? It could be a million different things but you need to find and focus on the one that resonates with you.  I’m currently working on a meditation that will assist you through the process of finding this fear and making it your ally.

Remember the emotion will come during the “approach.” Keep track of how you feel, as this will set the course of how the rest of your interaction with the trade will go.  Keep in mind that magnificent woman: Do you approach her as nervous, not confident, and fearful of reject or strong, confident and full of love?

Trading Losses

Those who have chosen this very unique career of “trader” face a mountain of challenges each day based on ever-changing market conditions. Added to the market challenges are emotions, which can be 90% of the game. You can have a great method, strategy and be taught by the best, but if fear, apprehension or hesitation come up the trader won’t take the trade…..this is an emotional block. All successful and experienced traders learn quickly to become the masters of their emotions. To accept and manage their weaknesses and leverage their strengths.

At first most traders start by researching and determining a method to trade. They do little to emotionally prepare for what’s to come. Yet they quickly find out that their emotions come into play early on, especially if they experience immediate losses. Losing money coupled with one’s own emotional “baggage” can impact the minds thought process and outcome.
My work focuses on the power of the mind and in particular the power of thought. These three problems and solutions do too. Nothing happens without the some form of thought, be it sub-conscience or conscience. After all, isn’t this what we’re left with when sitting in front of our monitors trading? What comes into our minds, as we trade can be avalanches of different thoughts. These thoughts then have the ability to assist us and add to our success or become our worst nightmares resulting in multiple losses.

Traders over time, come to the realization that trading will force them to face ALL their old and current emotional baggage and blocks. And that NOT being able to manage or “dump” the baggage, can hit the bottom line quickly.
When a trader’s plan doesn’t work they tend to blame it on the method, when in reality it usually comes down to an emotion causing them to react inappropriately. We can pick up automatic emotional blocks that prevent us from implementing a method effectively. Many try to get over these emotions on their own, but few master the changes needed.

But lets get specific and to the heart of these three trading problems. The first reason traders lose may seem obvious but in reality it stems from long term social conditioning. It’s their inability to ACCEPT LOSS. Losing generates powerful emotions, such as fear, uncertainty, apprehension, and self-doubt especially with men. And while women today can also be as affected, the data is supported mostly by men as they represent a larger portion of the client base.

Men are socially conditioned to succeed from the time they enter the world. From little boys being read, “The Little Train That Could” to the environments that surround them as they grow up. They are guided to be become achievers. Influenced by family, friends, education, and career environments they are encouraged to seek professions of Doctors, Lawyers, and Bankers. Images and social metaphors reinforce them. Striving to be right, number one, the breadwinner, and the best, always seeking perfectionism. They are socially conditioned to be the family providers. Add to this various cultural pressures and demands and men have a built-in fundamental obligation to succeed. (more…)

Trading Thoughts

To truly become a proactive trader, you need to believe that your trade WILL go the direction you thought. This shows that you have belief in your system that finds your trade setups in the first place. If you put your trade on and the first thing you do is mark your stop or think “I hope this goes well”, then you are bound to fail as a trader. Successful traders do not hope. They do the research and use their system to find good candidates and enter the trades. It is at that point that they manage risk. They know exactly how much they have at risk and are perfectly fine if they lose that much. Why? Because it is baked into their system, and every trade does not go the way they thought. You need to be the same way in your trading.

You need to have the courage to fail, step off the curb, and enter the trade. Expect that the trade will go your way and use the power of positive thinking. Set your target, entry and your stop and then you know, at any point during the life of the trade, where you stand. If your target gets hit and you see the stock continue to go the same direction, you can’t get mad. You simply put the positive trade aside and evaluate it in a couple weeks to figure out why it continued to go beyond your target. It is at that point that perhaps you make an adjustment to your system. Perhaps you find out that it was a news item that caused the surge and then you know that it was atypical, rather than the norm, and no adjustment is needed.

In going through this thought process, you prepare yourself emotionally and as a result remove the chance of trading on emotion once in the trade. As an example, you need to be fully prepared to lose the amount invested in a single trade if your stop is triggered. If you aren’t fully prepared to take that risk, then you need to adjust the size of your trade or move on to another trade. If you prepare and emotionally accept the fact that you could be wrong, your trading becomes more mechanical and less emotional. Take some time to role-play the different scenarios and see what your reactions would be.