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Strategies & Market Trends : DAYTRADING/SWINGTRADING STOCKS with INTRADAY INVESTMENTS
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To: - who started this subject5/27/2001 3:24:26 PM
From: drfibo   of 565
 
A Thought On The Psychology Of Trading:

Have you ever found yourself frozen like "a deer in the headlights" when it comes to ending a bad trade? Well you are not alone. One way I have found to overcome this emotional state is to think in terms of the trade as if you were actually the money invested.

Specifically, do you think your money cares if it is invested in QCOM or MSFT? What's that old statistical saying?...."probability has no memory." Well neither does your money. To put it another way, "your money has no opinion" on the stock it is invested in. The money will either increase or decrease based on the accuracy of your trading opinion but it never cares where it is invested at a moment in time, but you do.

A healthier way of viewing this phenomenon is to think of the exit from a losing position as a "transfer" of your assets from a situation less likely to produce a profit to one that is more likely to produce one. Under this way of thinking, you are not taking a loss, you are merely shifting funds into a position that is more likely to yield a profit...(an extended swing trade if you like).

Another benefit of this approach is that you spend more time looking for quality trades and less time dwelling on the losers. Why waste valuable psychological capital on loser when you could be riding a winner? The choice is yours.

Trade Well,

Ed - DrFibo
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