THE BLIND STOCK TRADER

No, this is not a story about a physically blind stock trader, although I am sure there are a few out there.  This is about all of us who trade.  This is about you and about me. This is about the blindness that affects anyone who attempts to trade for a living or for extra income.

Unfortunately, we all suffer from a blindness we inherited. We were all born blind.  We suffer from innate perceptual biases that cause us to focus on our egos and our emotions.  The former we seek to save; the latter cajole.  We want to “save face” by being right, if not all the time at least this time…at least with this trade.   We do not want to be wrong. Wrong is bad.  To be wrong means we have to deal with all the unsavory emotions associated with it.  But in our fruitless attempts to avoid unsavory emotions we actually attract them and magnify them, making mountains out of molehills, larger than expected losses out of the normal risks associated with trading.

Yes, the bad news is we were all blind at birth. But the good news is we do not have to stay that way.  There is a cure. There is an elixir. But we must be willing to accept the side effects associated with it.  We must let go of the ego.  We must get rid of distracting noise (e.g. CNBC, analysts’ opinions, headlines, needless charting indicators, etc).  We must manage our emotions, not coddle them.  We must accept reality.  We must embrace the unknown and the changes that come with it.  To do otherwise keeps us from seeing what matters, what is glaringly apparent in the price chart staring back at us.

Instead of chasing the new “new” indicator or testing an additional time frame, or searching for a fundamental or technical reason to stay in a losing position, maybe, just maybe, it would be best to study how and why we make the decisions we do, what biases keep us from the success we desire, and why, with all the technical tools at our disposal, so few make it in the trading business.  Maybe, just maybe, if we spend 90% of our time working on the mental game, instead of the technical, we could have a fighting chance at being one of the 10% who consistently make 90% of the money.

 

Maybe the best answer to our trading problems, whatever they might be, is to study the self, study the psychology of decision making, study neuroeconomics.

To do otherwise keeps us in the dark.

Just a thought.

 

 

 

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