Since this board is getting a little quiet, I thought I will make a little noise here... <g>
>>"One of the "hook" in the paralyzed greed emotion is the fear of missing the run-up when you're out of the stock position."<<
To put into equation: "hook" = fear of missing the run-up
IMHO and from my own personal experience, I believe this "hook" is the most deadly virus in our trading mindset. This "virus" may as well be responsible for the demise of most traders.
Here are some of the symptoms for those who are unlucky to catch this "virus":
Inability to take losses immediately;
Inability to take losses indefinitely until being forced by external circumstances;
Inability to take normal profit;
Inability to take huge profit!
Overtrading;
Chasing the runaway train;
Over-extending- as in all the egg in one basket;
Over-extending- as in too much margin;
Trading without a plan;
Trading without a setup;
Trading using tips from unknown party;
Trading using tips from known party;
Inability to see the market objectively;
Inability to see the price movement objectively;
Thinking too much, sometimes with a ridiculously unreachable lofty price target;
And most important of all,
The Inability to Trade What You See, NOT What you think.
Anyone is free to add more that is not on the list.
Guess what, it is our GREAT fortune that this "virus" is not in the same rank as HIV!
"Now, isn't it GREAT NEWS!!!!"
If we can focus our mind to de-emphasize that single "hook", either thru meditation, visualization, autosuggestion thru repetition (self-hynposis), we may just as well be able to minimize the affect of the above symptoms if not eliminated.
The moment you let go of the "hook", that is the moment you no longer care if the stock is going to take off without you. That is the moment you no longer find the need to trade everyday and all the time. That is the moment where you have the luxury to pick and choose ONLY the BEST setup you can see. If your intuition or instinct did not give you a high probability of success, you just don't take the trade. Even if those setup turned out to be successful later without you on it, it DOESN"T matter anymore. Because the very act of de-emphasize the "hook" included acceptance of the inevitable- that you're going to miss some of the run.
Let's look at this mindset BEFORE you even venture into the world of trading and investing. You are doing well on your career and you have been saving quite a bit. You are just an average guy/gal going thru life with its up and down. Meanwhile, the stock market are buzzing with activities where fortune were made and lost. Because you are NOT involved with the stock market, you will care LESS about all the stocks that took off BIG TIME without you. "NOW, isn't that a GREAT mindset!!!"
So, one day, your friend introduce you to the allure of the stock market. Wow! Big money can be made! No, EASY money can be made! Before you know it, you are "HOOKED"! Uhhh.....Ohhhhhh! You GOT the VIRUS!!!! And do I need to go on? All the above symptoms begin to surface.....
Now, here is an interesting question, HOW many will end up going to see a doctor BEFORE the flu get the best of him/her?????
Those who go to see a doctor may have a good probability to become part of that small percentage of winner. Unfortunately, NOT everyone who go see a doctor will be cured. Like a flu, this virus can come and get you any time. So, what can we do???
WAIT!!!! Some people take the precaution to take a FLU shot!!!! An immunization against the virus! Now, isn't that a GREAT IDEA!
See where I am getting at?
OK, so you get a flu shot. You are now immunized to the virus. (Meaning you focus your mind on the de-emphasization mentioned above).
WHOA!!!! The stock market is now totally different. Your perspective has changed completely without the effect of the flu. You no longer "think" about all the missed run and all the headaches that come with the hindsight. Suddenly, you are ONLY concerned with "looking" or "finding" a high probability setup that you can "see". If you can't find it, you don't trade. If you find one, you then take the trade. Your objective is now all about making money in a business sense of way. Cut cost and increase sales. You cut cost by taking losses quickly. You increase sales by refusing to take business from customers with bad credits; thus, you increase profit by refusing to take the trades with low probability of winning.
It is just like treasure hunting. You take your metal detector and scan the area. You will only dig on the area where the metal detector register the highest meter reading. And don't forget, during a stormy or rainy day, like a treasure hunter with a common sense, you stay home and relax.
For example. In my case, after the market first big correction in March of last year, I saw a storm coming. At least, my gut feeling sensed a storm coming. So, I began to liquidate most of my position. And by August I was mostly cash and stopped trading the rest of the year. Hindsightwise, it was a good decision. But I could be wrong and the storm might not come. But since I was successful with my immunization of the virus, it didn't matter to me if I was wrong. I was happy with my profit made in the first 3 months. And from my hard-earned experience I learned from my 1st and 2nd trade positions I mentioned in the previous posts, I REFUSED to give back what I made when I sensed uncertainty in the market. The point here is NOT whether you believe I did what I did last year; the point is that during what you think is a stormy or rainy day, you don't have to go out. And I'm sure there were others out there who did what I did.
And you can do all these as long as you don't catch the virus!
So, in summary and IMHO, Trading is just another avenue to do business. As in any business, you cut cost and sell only to customers with good credit history. And in a stormy day, especially when your business is an outdoor business, you will be closed. It is really that simple. Yes, it is only simple if you can rid of that nasty flu....
Of course, all the above is my own personal opinion only.
OK, I guess I make enough noise already... <g>
Take care everyone;
Cheers! |
