Sunday, January 24, 2010

root cause of killer emotions (trader's no.2 enemy?)

the no.1 enemy being "Lack of a fixed Trading System which u follow day-in and day-out without asking any questions".

but here, let's have a look at the root cause of emotions:-

fear

greed

comparisons

expectations

peer pressure

mental accounting

fear of loss

denial of reality

desperation

memories and experiences

criticism, fear of criticism

appreciation, yearning of appreciation

poor self-image

over-confidence

news, news channels

experts

...beware of all these

"Individuals who cannot master their emotions are ill-suited to profit from the investment process" - Benjamin Graham

"Investors should remember that excitement and expenses are their enemies." - Mark J. Perry

Fear paralyses you and Greed pushes you in the trap. It is critical to keep both these pet hounds locked in the other room when you are trading.Traders should be emotionless machines trading on the decisions taken as per some algorithm (system).

emotions don't let yout take the RIGHT decision.

There is always 50% chance of winning in share trading. Because it will either go up or go down, no third direction. So why is it that people lose more than 50%? Why do people profit small and lose big? -- It is because of emotions. We are our biggest friends as well as foes. your emotions got you into this trade, that's all, don't take these inside.Prayers and Emotions have no place inside stock market.

No comments: