Thought I would like to summarize my past thought into one cohesive summary: I like to thank other contributors who also helped me to refine my expression of my thought in this thread.
In the beginning here, I share my opinion that one must move on after a trade is completed. Each "completed" trade is unique and is a byproduct of the reality of that moment.
The reality of that moment is the battle between buyers and sellers. If sellers seemed to be winning when you are long, then it is prudent to get out with a small loss (perhaps, even before your stop loss is hit).
The reality of that moment also included your own internal battle, the battle between your disciplined ego and your regular ego. If your disciplined ego won, then we should trust its decision and move on. And if your regular ego won, then we should definitely move on to avoid feeding your regular ego.
In both cases, if you don't move on, you are only giving the regular ego an opportunity to dwell on the "what if… could have… should have…etc..". As a result, it is inevitable that self-criticism will be forthcoming. There are discussions that we should trust ourselves not to do that when reviewing our "completed" trade. Well, IMHO, it is a whole lot easier to trust my own decisions and move on than to trust my regular ego not to be so self-critical, especially in the face of hindsight. Our regular ego, without disciplined, can be brutal when it comes to self-analysis; so why empowered it with energy? (as h.g. has insightfully noted)
Therefore, to avoid the opportunity to empower our regular ego, IMHO, we MUST move on after a trade is completed.
Moving on after a completed trade can be related to what hunters do when they missed a hunt. They move on to the next hunt. If hunters spent time dwelling on their missed hunt, then they would be missing all the opportunities that flashed before their eyes. And they would go home hungry.
Hunting, especially in the land of dangerous creatures, is a dangerous sport. Therefore, it is prudent that aspiring hunters spent time learning as much as they can about the tools that are used for hunting as well as the psychological demand of hunting. Training and repetition of action due to practice (as Dominick has insightfully noted) will indirectly train part of our regular ego as well.
How well will the aspiring hunter succeed in the real hunt will now depend on how well the hunter handles his/her psychological profile during the real hunt. This is where the battle of regular and disciplined ego begins. And this is where the line is drawn between survival or not. If the regular ego won, then the game is over. Paralyzed fear/greed will eventually doom the hunter.
What is paralyzed fear and greed?
How many of us actually are aware of paralyzed greed? IMHO, paralyzed greed is when one believes that his/her chosen stock can do no wrong; that it is going to achieve his/her lofty price target despite current price decline. His/her regular ego will have unlimited rationale for the current price decline; even in the face of a huge downtrend. In street language, when one falls in love with the stock and married it, IMHO, he/she is paralyzed by greed.
On the other hand, paralyzed by fear is our inability to take action even when we know what the proper action is. This usually happen especially when one is over-extended, either due to too much margin or too much egg in one basket. When one enters a trade, the trade turned against him/her, the immediate huge loss (remember, he/she is overextended) is so unexpected that it triggered a fear that can be crippling. As the loss mounted due to further declined in price, the paralysis is completed. This is the most unpleasant experience because this is when one regular ego is at its most brutal manner.
Now, you know why hunters/traders who suffered from paralyzed fear and greed will not survive very long. And you will also notice that our regular ego play an important part in this two emotions. So, what can we do?
And this is where training of our disciplined ego comes in.
Disciplined ego is really our regular ego without the negative thought. Thought power has energy. And negative thought gives out negative energy. And negative energy is where fear and greed is based on.
So, it makes common sense that we seek to discipline our regular ego using method such as meditation, martial arts, eastern or western path of self-improvement. These methods can help us to focus and redirect negative energy away and therefore "dissipate" the energy that is needed to empower the negative thought.
Will and Intent are required to carry on this journey of disciplining our ego. They provide the energy and focus for us to build a foundation for a disciplined ego. And of course, when you have will and intent, you have self-awareness.
Self-awareness is the basic building block for all of our journey to any successful endeavor. For it is from self-awareness that one finds the need to improve on oneself before it becomes too late.
Self-awareness also allows us to avoid giving our regular ego any opportunity to resurface. Moving on after a trade is by itself a self-awareness that our regular ego will not be too friendly if it is allowed to dwell on the completed trade with hindsight.
Self-awareness also allows us to call it a day and stop trading when our regular ego won the battle over our disciplined ego during any trading day. Because we are human, it is practically impossible to rid of our regular ego. And because we are human, we are subjected to our up and down of emotional cycle. There will be days when we don't feel quite up to par, your self-awareness will tell you not to trade that day. And there will be days when you are feeling good, your self-awareness will tell you to take advantage of it.
Listen to yourself, be your own best friend; this is really the perquisite for any successful endeavor. Furthermore, there is no free lunch anywhere and everywhere. There will always be a price for everything we want. To be a successful trader, the price is the time and energy we must spend on training (which included training our disciplined ego as well) and educating ourselves on the art of trading. If you don't pay this price, then the market will charge you an unreasonable monetary price. Either way, a price will be paid.
All the above is my opinion only. I'm not a psychologist and all reference to any psychological concept or theory is from my own personal experience only. So, what may work for me may not work for you. How I do what I do is not important. What you do with your self-awareness is what really counts. You must seek your own best way for your own journey. I wish everyone a good and safe journey in the art of trading.
Good Luck to ALL and Cheers! |
