A case of Emotional whinge on emotional free trading
| |
|
Last Poster |
Posts |
Pages |
Last Post |
| |
|
|
|
|
|
|
| Author |
Message |
     holycow
Member
Username: holycow
Post Number: 86
Registered: 08-2004Rating: 
Votes: 1
|
| | Saturday, September 18, 2004 - 02:31 pm: |  
|
Two prime/raw emotions dominant in stock trading are Greed and Fear. Of the two, Fear is king because it is designed into our genes for survival. Fight, flight or freeze are the basic reactions to our feeling of fear. Fear works because its objective is to ensure we adopt the right strategy for our survival. So in a very natural way we have to ask if suppressing fear, our built in survival instinct - a good thing?
Being fearful and being fearless both have their respective advantages - the first instinct makes sure we react by fleeing, the latter makes sure we stand out ground to fight. You don't really want to get rid of both or either one.
What you really need is to fine tune and adapt yourself to these very natural human instinctive reaction - be fearful or fearless when you have to, to flee or fight as the situation allows. What you don't really want is to allow fear induces you into a "freeze" stance - a paralysis that will cripple you from reacting with the right action - this is your PRIME objective in wanting to conquer your fear.
So, how about thinking a little off tangent and instead of suppressing your natural instinct, think about how to:
1) make use of your fear to your advantage; act as natural as you would deal with your own survival;
2) think of ways to work, think of way to adapt your trading that allows you to fear appropriately such that you will not be overcome by paralysis;
3) in the simplest way as I see it, paralysis is introduced due to various wrong moves or measures that go against your grain or your intuition, which falls back to your character like whether you are a risk taker or not. But since by now you have already analysed your character to death like you know you are an introvert, extrovert, a blend of both, with a bit of gambler instinct etc (frankly no one knows you better than yourself and you don't need me to tell you that!), how about just go to the bottomline?
Think for a start dollars and cents instead of money management, risk management etc. Big words don't mean a thing when you don't get it. So let's stay with small things like how much you are willing to lose and how much you are expecting from your return. Small money has to go out in order to win big money - I am sure you know this! There is no free lunch in this world and I am sure you know this too!
Let me be plain and give you an example: if you have $10,000 and you would like to try your luck in the stock market. How about dividing that into 5 bets with $2000 each? Don't worry about commission etc because being petty sometimes make you into someone that is penny wise pound foolish. So there is no need to be too clever and aim for the sky.
Of each $2000 bet, tell yourself how much loss you can "stomach" before you get into a "panic" state and find it hard to exit the trade. Say $200 - ok, you have this mental picture in your head - you are going to bet $2000 on a single stock and if you lose $200+commission you are out. To help you "firm" up your determination to exit, tell yourself this repeatedly and promise you will do it when the time comes. At least I hope this will set you up with the right mental attitude.
Like most people, no one likes to lose; so choose your stock carefully. If you don't know which to choose, well, spend sometimes checking out what others are saying. Check out how and what kind of stock they are talking about. Find out how much that stock costs and how much % return he is talking about.
One way to minimise your exposure to risk or sudden stock plunge is to buy your stock at a low level. Here you have a different kind of risk but if you stay with the theme of buying low price uptrending stock and are willing to be patient with your choice, I have a feeling the chance or frequency you face with making the hard decision like exiting a trade with a huge loss would be minimised - this depends a lot of your stock pick. So pick wisely.
One way to minimise a wrong stock pick is to do your homework in both TA and FA. Find out the story behind the stock price movement so you develop a degree of confidence when the stock price makes some sudden moves.
Whew! This is getting really too nitty gritty to go into each detail, but the gist of thing here is you need to be realistic and at least understand the concept of risk/reward. Go through this thread http://forum.incrediblecharts.com/messages/35933/343020.html and see if it makes sense to you.
I think I can write a book on this and mislead everyone down the dead end. I guess I will stop here. Got to cut loss or I will still be writing.... errh... until the cows come home!
Cheers!
HC
"... if you've got a chart, I have an opinion!"
|
|
Threads by Last Post Time: First
Previous
364
365
366
367
368
369
370
371
372
373
Next
Last
|
