Emotions: A Trader's Worst Enemy; Get Rid of Fear and Greed - You'll be Glad You Did

You hear it over and over and over in books, forums, and chatrooms. Fear and greed, fearfulness and greed, fearfulness and greed. Emotions are a trader’s worst enemy. What are we supposed to make about it? We are human after all. Person beingnesses have got emotions. We can’t just throw a electric switch and suddenly act like “Data” on Star Trek the Adjacent Generation.

So what’s the reply for the aspirant trader?

It all furuncles down to 2 chief components:

1. Having a plan

2. Having an appropriate trading style

You hear the first point often. Objectionable small phrases like “Plan your
trade, Trade your plan” are thrown around like it was really just that simple. But without the second part, the first portion is useless. What good is a program if
you don’t cognize what type of program is appropriate?

For example, you could be after your commute to work expecting to do the 30
mile trip in 20 minutes, but if you’re on ft that program isn’t going to work
very well is it? The program was simply not appropriate for you in that situation.

There are an limitless number of possible trading methods and styles, from
chart reading to cardinal analysis, rhythms to Fibonacci retracements,
intra-day, Dogs of the DOW, Options, Futures, FOREX, Pork Bellies, Arbitrage –
it can do you experience like your caput will explode! But what you merchandise makes not
matter nearly as much as how, or perhaps why you trade.

Why make you trade?

Are you the kind who wishes to play picture games, loves fast action, and have no
problem being glued to a silver screen all day? Then maybe intra-day trading 1 and 5
minute charts of high volatility equity options is for you.

Rather check your trades maybe every few days, or maybe once a week? Then
perhaps swing trading currency braces is more than your style.

Prefer sleeping easy at all times, never distressing in the least about your
trades because you knew up front that they would profit? Then my friend,
arbitrage trading is calling your name.

Every style have its advantages and disadvantages, its hazards and rewards, but
most of import is that the style must fit the trader. If you leap into trading
believing that just because person else can make it this way, then so can you –
you may be in for a very painful surprise.

Never merchandise person else’s plan. Never merchandise person else’s style. You
absolutely must cognize your ain disposition well adequate to determine what you will
trade, and exactly how you will merchandise it. Your money management rules, your
tolerance for losses, i.e. costs, , your willingness to change the trade if your
market sentiment is proven incorrect – these are the true secrets to trading that
separate the novitiate from the veteran. With these in place, emotions can be
reduced if not eliminated.

After all, which would set you most at ease? Drive through an unfamiliar
city alone with no guidance, drive with a map, or driving with a full colour
street-level-detail general practitioners pilotage system?

I’ll take the GPS, give thanks you.

So before you put your first, or next, trade, see the following:

a. Make you understand what you are trading and why?

b. Make you cognize what you will make given any of the possible outcomes?

c. Are you ready and willing to acknowledge you were incorrect about the trade, and if so what will you make about it and when?

d. Are you comfy with the idea of losing the money you are putting into the trade, and will your trading account last to merchandise another twenty-four hours if you do?

These are all portion of what you need to have got in your plan. I urge you to have got
considered them thoroughly before risking the slightest amount of money in a
existent trade.

Emotions – “You can’t merchandise with ‘em, and you must trade without ‘em.”