Wednesday, November 10, 2010

The Daily Note - When Trades Trip, Are You Wrong or Are You Poor?

When trades trip you up, and they will, what do you do? How are you prepared. Being stopped out is never easy for ego or for pocketbook, but I feel the most damage is that we lose confidence. And the loss of confidence is what most wish to avoid, therefore, I think it adds to the reason why many traders do not put in stops. Yep, a stopped trade only reinforces the feeling of failing.

There is nothing worse a trader may think at the time it happens, than to reveal a bad trade.

It may help you to know why you don't place your stops and rather suffer through losses. Of course, sometimes those too have a way revealing themselves but perhaps not as badly since it can be stirred into overall returns. And the term "loss" has much less of an impact on ones psyche as being "stopped".

"Stopped" is like being caught. Like for being on the wrong side of the road. You know, the cop with red lights behind you feeling. Have you been drinking? What are you doing going driving the wrong way? Take a test, are you on drugs? In other words a feeling of somehow being wrong; as in "What's WRONG with you?" This is a blame; it's all your fault.

A loss is easier on the ego, psychology being what it is, everyone loses sometimes and everyone loses a lot sometimes. You can justify it easier. After all, you lose your job for many reasons or you can lose at a game of chance against the odds. "Bad luck, chap!", go to welfare and get help. People will feel sorry for you and give you help, hold your hand, sympathize and even help you lick your wounds. This way you don't have to admit to being wrong. This way you can save face; and rather than being wrong, you are "POOR". Poor you, too bad.

It's important to know that this way you can continue your way and end up broke. 90+% of traders fail, this way.

So then what? Well it depends on how much you rely on other people's approval to be honest. How important is it to you to be judged by others and how much do you rely on their judgement. I am not speaking business wise, because that is different, but speaking on your personality and how much other people's thinking influences your behavior.

Some of us were raised by influences in our environment that relied more on what other's think than what we think. These influences emphasized our blending in rather than sticking out. Some of us were raised by influences that allowed us to question and not necessarily accept what was told us and to rely on our instincts and our knowledge. One creates dependence the other independence. I think we all have both but which one dominates you and your life only you can assess. Knowing which will help you to overcome your bad trading behavior and can help you to survive to trade another day.

Survivors breed confidence, and confidence breeds success.

Happy Trading, Living and Dancing

The Daily Pick - MEE

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