Trading Psychology – Fear and Greed in the Wall street game
(And Some Things You Might Not Have Believed About)
Everyone that trades absolutely must assess their trading psychology often. Many of us have learned about the effects of fear and greed we face when we control the markets. And, more than likely, you have thought to yourself “I’m not fearful” and “I’m not greedy”. The truth of the matter is “YES, you are”. All of us each experience different levels of fear and avarice in a trade. When ever we say ‘fear’, we are not talking about you crouching in a fetal position in the corner trembling and unsteadiness back and forth. So when we say ‘greed’ our company is not talking about you wrenching your hands, salivating at your mouth like you would imagine Mister. Scrooge. Fear and hpye are incredibly subtle in a trade and can various from the other person within mere seconds
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When the market immediately moves against our trade, you could notice an immediate rise in your anxiety. Seasoned traders are being used to this because it is very seldom that a trader will struck the exact bottom or top of any operate to make an admittance. They expect a move against them for a short amount of time. However when is it time to exit the trade, if it goes on its move against you?
It’s that feeling you get when someone advances out and startles you. It’s not that feeling like almost getting hit by a car. Nor is it the feeling that you have got when watching a terrifying movie.
Most of the time, fear in the market is a more subtle experience. You will find a challenging time recognizing it as fear simply because your mind will be found up in the instant. You’ll be very busy attempting to call and make an important decision and discerning the future regretful distastefulness you will experience if the incorrect decision is made.
After a decision is made and you are finished rejoicing your latest victory or grieving the failure of your decision, step back and give yourself an genuine, non-condescending, non-self-pitying analysis. You will find that dread had created the formula of the last decision.
Often be aware of this emotion. Never let it decide your fate. The only way to beat it is to plan and stick to that plan. Plan your access, your exit, your target(s). Make sure to have alternative plans in circumstance of different scenarios that could possibly enter into play with your trade.
In reading about fear and greed in the market, I have realized that something was missing in those writings. Patience will certainly not be mentioned. Tolerance has the ability to magnify fear and hpye.
Since we are communicating about fear, let’s look at how patience influences fear within the company. Scenario:
Your trade is moving against you. You are losing money. You feel that empty belly feeling and slight anxiety. If you supply the scenario too much patience, you could be in for deeper losses. If you have too little endurance, you might exit the control prematurely and miss away on much welcomed benefits.
So what do you do? At this point in the game, it is a toss up. Don’t beat yourself up too badly if you make the wrong decision but be sure to learn from this experience. The class to learn is to plan BEFORE you click that button that gets you in to the trade in the first place. A large number of seasoned traders fall into the trap of declining to plan appropriately too. They get cocky but the market will let them know soon enough of their failings.