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Two Emotions

  
  Education
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Two emotions that plague the inexperienced trader are Anticipated Loss  and Buyers Remorse.

Does your trading life go something like this? You see a trade line up, and suddenly a cramp in your solar plexus appears as you anticipate a possible loss. You put this down to simple fear and make an effort to mentally overcome this internal barricade so as to enter the trade. Acting quickly so as not to miss out, you swiftly enter the position and your trading platform indicates that you are filled. Now you are gripped by the sensation of buyers remorse – too late to back out now… A small voice in the back of your subconscious says “what have I done?”

To your great delight and surprise, the trade soon goes in your favour, and for a while you feel a warm fuzzy glow and give yourself a little compliment, but soon the old feeling returns in the form of a hot flush. Anticipated loss is back again as you worry about the market turning against you and taking away the profit you now have. (more…)

Two Emotions

  
  Education
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Two emotions that plague the inexperienced trader are Anticipated Loss and Buyers Remorse.

Does your trading life go something like this? You see a trade line up, and suddenly a cramp in your solar plexus appears as you anticipate a possible loss. You put this down to simple fear and make an effort to mentally overcome this internal barricade so as to enter the trade. Acting quickly so as not to miss out, you swiftly enter the position and your trading platform indicates that you are filled. Now you are gripped by the sensation of buyers remorse – too late to back out now… A small voice in the back of your subconscious says “what have I done?”

To your great delight and surprise, the trade soon goes in your favour, and for a while you feel a warm fuzzy glow and give yourself a little compliment, but soon the old feeling returns in the form of a hot flush. Anticipated loss is back again as you worry about the market turning against you and taking away the profit you now have. You watch the current candle as it bobs up and down… You stare at it in a trance as the feeling of being gripped by a giant hand increases. You struggle for a moment against this sensation, but then it overcomes you and you exit the position. Price moves on without you, and you are filled with buyers remorse again! On and on it goes, slowly eating away at your confidence and sanity.

Here’s what it feels like once you overcome this hump :

Having been watching a dull market for several days from the sideline you suddenly see a trade shining out on your chart. You have an initial “ah ha!” sensation, but you let that go so as to think carefully and not do anything rash or impulsive. You decide to take the trade, and spend some time calculating the correct entry and stop position; you know your standard 1R risk value already. Having checked and double checked that everything is ok, you enter the orders into the market and fill out the necessaries in your trading log, including entry time, size, reason for entry etc… Then you switch off to go read your favourite novel or walk the dog.

The next day, you check the market to see that your order has been filled and the market has moved in your favour. You think “good…” and examine the chart for the correct new stop placement, and you adjust your order in the market. You switch off and go do something else.

3 more days of these quick adjustments follow, and your profit increases with each surge, but on the forth day you check to find that you have been stopped out during a sudden reversal for a profit of 2.6R… Nice trade. You fill out the rest of the entry in your log, and then assume the attitude of sitting on the sidelines again for the next trade.

Now – the thing to bare in mind in the above examples as that both people might be TRADING THE SAME MOVE…

9 Things-Jesse Livermore said regarding excessive trading

  
  Education
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“Money is made by sitting, not trading.”

2. “It takes time to make money.”

3. “It was never my thinking that made the big money for me, it always was sitting.”

4. “Nobody can catch all the fluctuations.”

5. “The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money everyday, as though they were working for regular wages.”

6. “Buy right, sit tight.”

7. “Men who can both be right and sit tight are uncommon.”

8. “Don’t give me timing, give me time.”

and finally, the most important thing:

9. “There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. Not many can always have adequate reasons for buying and selling stocks daily – or sufficient knowledge to make his play an intelligent play.” (more…)

A Blast From the Past-Quotes Relates to Trading

  
  Education
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The quotes alone are worth the price of admission. Here are a few that could be applied to trading. Take a read and think about how each quote relates to trading.

Emerson said, “All is riddle, and the key to a riddle is another riddle.”

Faulkner once said, “Don’t bother just to be better than your contemporaries or predecessors. Try to be better than yourself.”
Einstein once said, “Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”
Samuel Johnson wrote, “Almost all absurdity of conduct arises from the imitation of those who we cannot resemble.”
Shakespeare wrote, “Nothing is so common as the wish to be remarkable.” “When you have eliminated the impossible, whatever remains, however improbable, must be the truth.”
Robert Oxton Bolton once wrote, “A belief is not merely an idea the mind possesses; it is an idea that possesses the mind.”
Nietzsche wrote, “The individual has always had to struggle to keep from being overwhelmed by the tribe.”
Albert Einstein said, “Whoever undertakes to set himself up as judge in the field of truth and knowledge is shipwrecked by the laughter of the gods.”
“The defects and faults of the mind are like wounds in the body; after all imaginable care has been taken to heal them up, still the will be a scar left behind.” French writer François de la Rochefoucauld. “
“It has been said, ‘time heals all wounds.’ I do not agree. The wounds remain. In time, the mind, protecting its sanity, covers them with scar tissue and the pain lessens. But it is never gone.” Rose Kennedy 
Philosopher Kahlil Gibran wrote “Out of suffering have emerged the strongest souls; the most massive characters are seared with scars.”

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