It’s very easy to get locked into a scenario, or an opinion of what you think the market ‘should’ do based on some economic development. This happens to all traders to varying degrees, losers, breakeven, and profitable.
One of the key characteristics that separates the best from the rest is the ability to recognize when their opinion is wrong and then quickly act in their own best interest. We are taught to trade what we see, not we think, but the problem is most traders don’t believe what they see, instead, they either lack confidence or are locked into a scenario of what ‘should happen’ in the market.
We’ve all heard the saying that the market can stay irrational longer then you can stay solvent, but for most that statement is only understood on an intellectual level, and not truly embraced. By embraced, I mean accepted on an emotional level. Emotional acceptance of ‘what is’ represents the key to overcoming the all too tempting pull to get locked into a scenario. And emotional acceptance is part of self-confidence.
I will be talking about this, and will give some practical tips, in an upcoming trading psychology webinar on 10/14. You can register here or here The webinar is free to all and is hosted by MarketDelta.
[…] very easy to get locked into a scenario of what the market ‘should do”, As a short-term trader, you’re job isn’t to predict the market, your job is to make a prudent […]
[…] This approach accomplishes a number of things, and helps to operationally what I mean when I talk about focusing on what we can control and letting go of the rest. It is also a good example of one of my rules in action, that we must be rigid with risk but flexible with expectations. […]
[…] tendency to engage in aggressive or escape behavior. High stress levels are also associated with cognitive rigidity. In other words, stress is associated with the tendency to prematurely latch onto response choices […]
[…] and a variety of health concerns) the other reason is that tick-itis is an emotional dis-ease, and when emotions are heightened, our perception narrows. Emotions act as a filter on our perception of the market (and of reality); essentially, our […]