December 19, 2006

Trading Emotions

The most common emotions discussed by traders are greed and fear.Other comes and melts with market sentiments

Excitement

Comes when our latest trades are in top gainers each day.When all our trades mints money.We are feeling shortage of funds to our trades needed ,as our Analysis /news provider has an eagle eye.

Feeling of Joy/ Pride

Remember Dhoni when hits consecutive sixes/ boundary and we are still expecting same from next ball or imagine India winning world cup Or when your trade has jumped almost 50 per cent inside five trading session.

Fear of Losing Out /Left Behind

The crowd behavior at a closing down sale: "Grab as much as you can".
Or buyers when stocks are gapping up in a strong bull market: "I don't care what the price is, just get me in"(happens when you have tip or insider news stocks of getting X times in X number of days and stock hitting upper ceiling day after day).


Refusing

When price gaps down through your stop level: "This is not happening to me -- there must be some mistake or this fall is pseudo."

  • "Fall in my stock is just a temporary -- everything else is still going up."(Sugar is best e.g. we have)
  • "I am sure that the stock will bounce tomorrow form x level -- or I'll move my stop down to below there."
  • "The fundamentals are still good -- I'll hold for the long run."

Anger

The attack response triggered when someone cuts you off your position be it margin call or when a trade just won't go your way or your shares delivery comes short or the news you have wont worked :

  • "I've been cheated."
  • "Brokers are a bunch of thieves."
  • "It's the government's fault - they should protect us."

Frustration

Negative self-talk: "You idiot -- how could you have missed that he told you to buy that share in morning ."

Inertia

An inability to concentrate or make decisions. You review many indicators, many of which you have not used in the past , in an attempt to arrive at a decision -- while price ticks unexperienced fall.

Panic

What Hamilton referred to as the abandonment of hope: "I don't care what the price is, just get me out." (When everyone know that ship is sinking ,happend in May ,2006)

Despair

Feelings of loss, sadness, worthlessness or helplessness. Loss of confidence.(Mental Blocks that retail investors still feeling after Past scams and Crashes).

Acceptance

Recognition of past mistakes. Acceptance that you have to incur losses if you want to make profits. The inner calm that comes from having "let go". A feeling of having gained from the experience. An expectation that you will do better the next time. Confidence restored.


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