All Entries in the "Trading Psychology" Category
How Competitive Are You?
October 26, 2006 at 9:40 am
Trading is as competitive of an environment as you’ll find anywhere on the planet. With millions of participants, literally trillions of dollars at play, and some of the brightest minds on earth manning the front lines, you’d better show up with your game face on if you want to win in this game!
I’ve been watching the Soul of a Champion series on the new Versus network (formerly OLN), and it is awesome. It stirs up emotions within me every time I watch and hear these stories of great champions in their respective sports. Their drive to succeed and the road which took these athletes to the level they are at is pretty inspiring.
How competitive are you? How driven to achieve your goals are you?
Whether we’re talking about trading or something different on a personal level, you’ve got to have goals in place in order to have a direction each day. How bad do you want it? How hard are you willing to work? What are you driven to achieve? These questions are constantly in front of us as we check our progress, and I think they’re healthy and motivating questions to continually ask ourselves as traders. Ignoring them would be a mistake.
I’ve found that hard work not only improves my skills, but it’s an ongoing source of confidence, which is a requirement for trading. Doing my homework and constantly reviewing my results adds to my confidence level in each trade I make. To put cash at work when there’s an element of fate involved that may be out of your control (like trading), it does take confidence. I set my goals high and I hope you do too!
Set the bar high for your trading. If you want to see how we’re managing trades in this market environment and find an added element of confidence, come take the free trial and see what we’re all about. Our growing community offers a lot of tools to help you reach your trading goals, and we’d love to trade with you!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
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3 Signs You Have a Pet Stock
August 23, 2006 at 12:03 pm
One of my top 5 trading books is How I Made $2,000,000 in the Stock Market by Nicolas Darvas. From time to time I re-read this book because there are some good lessons and reminders in it. On page 11, Darvas refers to stocks he was trading in a funny way but one which all traders have been familiar with at one time or another:
“…For some of them I acquired a special liking. This came about for different reasons. Sometimes it was because they were given to me by a good friend of mine – other times, because I had started by making money with them. This led me to prefer these stocks more than others, and before I knew what I was doing I had started to keep ‘pets’.
I thought of them as something belonging to me, like members of my family. I praised their virtues day and night. I talked about them as one talks about his children. It did not bother me that no one else could see any special virtue in my pet stocks to distinguish them from any other stocks. This state of mind lasted until I realized that my pet stocks were causing me my heaviest losses.”
No doubt we’ve all encountered our share of “pet” stocks, but are you holding onto any of them right now? Here are three signs you may have a pet stock:
Slay Your Trading Giants
August 9, 2006 at 5:20 pm
They’re waiting for you when you wake up. They may have prevented you from sleeping at all.
They might come around before the opening bell, and sometimes they won’t leave even after the closing bell rings.
If you don’t skip a trade because of them, then you’re likely to hear them after your order gets filled.
They are your trading giants, filling your head with anything but confidence, and you must overcome them if you’re going to make it in this business!
It’s A Fine Line
July 17, 2006 at 10:26 am
I was reading this article on trading with conviction recently and it got me thinking about the fine line between having conviction in your trade and having respect for the market.
While I wholeheartedly agree that successful trading does require conviction in your decisions, that element alone will not make you a great trader. There are plenty of times when it’s best to respect the market and allow that to override (or at least influence) your strong belief in a trade.
Take last week as an example. The market had been pounded and stocks were getting cheaper by the day. You may have gotten a strong sudden urge to start buying during the fire sale, but a respect for the downside momentum ought to have talked you out of it, allowing you to wait for a lower-risk entry. Waiting for confirmation that a turn is taking place is always wise. It’s one thing to start building a position into weakness which you intend to hold for a long time (like a position in an index-based ETF for your IRA account), but it’s a different mentality altogether to throw caution to the wind and insist that your timing is perfect and you are 100% correct to go all in, hoping for a home run trade.
So the next time you have strong feelings about a trade, be sure to consider the other side of a trade and have some respect for the market. Either you give the market respect, or it will demand it from you! Taking a look at the opposing side just might lead to an adjustment in your position sizing to reduce some risk, or it could leave you feeling even stronger that it’s time to trade aggressively. Whatever you decide, be sure to stick with your plan once you’ve made it!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
[tags]Stocks, Investing, Stock Trading, Trading Psychology, IRA, ETF[/tags]
Why Upside Has Been Limited
June 28, 2006 at 8:44 am
Lately we’ve seen occasional bounces with flashes of brilliance (like the June 15th rally which was the best one-day point gain for both the NAZ and S&P 500 since March 2003), but the upside has been significantly limited. Since the major indexes started trending lower back in May, the upside we’ve seen has merely been the flash-in-the-pan type. Why is that so often the case during bear markets?
Consider the speed of the 2 recent market declines. They were both downdrafts where the selling was heavy and constant with no real breather on the way down. Both selloffs came with streaks of 8 consecutive down sessions for the NAZ (5/9 thru 5/18, and 6/2 thru 6/13). Combine these ugly selloffs with the fact that so many participants in the market can’t seem to take a loss no matter when they occur (they aren’t disciplined traders who know when to sell stocks!), and you get the ingredients for persistent pain.
Get A Grip!
June 27, 2006 at 9:38 am
How’s your grip on your emotional swings in trading? Are you able to narrow your focus when things start to go your way? Are you able to walk away (if even for a short time) when you recognize that you’re making mistakes? If a fly on the wall were to observe you during the day or during the week, what would he see when it comes to your self-control over your emotions?
Making and losing money (trading) inevitably stirs up some emotions within us. Whether it’s the pain and frustration of a losing trade stopping you out, the excitement of money flowing into your account by way of that trade you just nailed, or the uncertainty of that new position you just entered, trading can easily put logic on the backburner if you let it.
Like it or not…
June 22, 2006 at 9:35 am
This is the final installment of the Trading & Golf Series. I sure hope you’ve enjoyed reading it, because it’s been good for me to reflect on the endless similarities between these two passions so many of us share. Hopefully you’ve gained something from it as a trader, a golfer, or both!
Maybe you took up trading to make some extra money or start a new career. Maybe you took up golf to pass some free time and enjoy the outdoors in a relaxed setting. Like it or not, you’re going to learn something in them both! The dynamics of each game (and trading is a game) are just such that you’re bound to discover some of your tendencies. The fun part is, you’ll immediately have the opportunity to improve.
Golf and trading both teach us so many lessons about ourselves, and we can apply these lessons to both efforts. We never know what’s right around the corner, and events can easily catch us off guard. Your perfect drive in the middle of the fairway ends up in a divot. Your winning trade gets downgraded overnight. The wind picks up right as you hit the ball, and you never had time to adjust for it. So many things can happen….
But, it’s not what happens to you that counts – it’s how you respond to it.
Respecting the challenges of both golf and trading is part of their appeal. Knowing that significant rewards can accompany improved skills is what keeps us all coming back for more, whether it’s the satisfaction of a lower 18-hole score or a fatter trading account. It’s a process, so strive to find ways which will benefit you now, but more importantly, over the long haul. Stay determined and patient. Work hard. Plan to overcome adversity. And never underestimate the importance of a clear head in both endeavors. Your ability to focus solely on your next shot or your next trade just might start your next hot streak!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
[tags]Golf, Trading, Trading Psychology[/tags]
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