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SOME THOUGHTS ON THE PSYCHOLOGY OF TRADING
ARE TRADERS BORN OR MADE?: I like this quote, “A lot of the best traders are stubborn iconoclasts who are willing to challenge conventional wisdom, identify an edge and stick to it. The noise of the world doesn’t deter them from their inner convictions.”
PROFESSIONAL TRADERS MAKE MONEY BY PATIENTLY WAITING: “Independent traders have the luxury of picking and choosing their trades. They don’t have to trade all of the time. This is their edge. They can wait until the market patterns are working for them.”
BUY HIGH AND SELL LOW: “Our emotions are not our friends when it comes to investing. Relying on emotions is a quick way to buy high and sell low. This is because people give into their greed when they see everyone else making money in a specific stock or asset class, and then they give into their fear when that stock or type of asset plummets from being overvalued.”
THE PSYCHOLOGY OF DAY TRADING: Although I do not personally “day trade” there is some good psychological lessons here for all types of traders. “While many men and women get into day trading to make a quick million, an astonishing average of 2/3rds of them will walk away with some serious losses. With the vast money making potential associated with day trading, why do so many fail to earn? Well, a quick look into day trading psychology yields some interesting answers to this question.”
HOW DO METAPHORS AFFECT OUR TRADING? Take a look at this list by Brett Steenbarger and then add mine to it: Trading is War. Prepare Your Weapons.
THE BIGGEST THREAT TO YOUR SUCCESS “Unfortunately the stock market has a nasty habit of slapping down over confident traders with a big loss.”
10 RULES FROM MICHAEL JORDAN: “If you have 100 percent confidence that you can pull off a shot, most of the time you will.” One of the 10 rules, of course, is KEEP IT SIMPLE.
TOSSING A COIN AND PROBABILITY: “In the short term, anything can happen; this is why the coin toss is an appropriate analogy for the stock market”.
NOW I HAVE SEEN EVERYTHING: A bracelet that mirrors your trading emotions. I wonder if I should sell this on my site?
WALKING THROUGH LIFE: A friend of mine, who will be going through major life saving surgery Monday, forwarded this one to me. Although it has nothing to do with trading it does have a lot to say about living. And if you are not living you are not trading! Thanks Johnny! My trade is that you will be walking and able to continue our “hedge fund” venture very soon.
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