I Want It Now
In contemporary society, we constantly hear the message, "Don't wait. Get it now!" Credit card debt has skyrocketed in the past decade. Rather than patiently wait, people buy what they want immediately, when they want it. This happens in the trading realm as well. Rather than wait for a trade to come to fruition, traders are infamous for selling prematurely to lock in profits. Or when the slightest dip occurs, many traders sell out of fear. Patience is a virtue while trading, however. Once you execute a trade, you must wait patiently to see what will happen in the end.
Why can we wait patiently? Part of the reason can be found in our belief systems. When we think, "I must have it now," we start to believe that we cannot wait. We believe that we cannot maintain self-control. When we see that a position has a gain on paper, we start to imagine how great it would feel to take home the profits. Even if we don't need the money at the moment, we think of how pleasurable it would be to spend our newfound wealth, and suddenly, we can't wait.
Rather than viewing money in play as actual money, it's useful to mentally transform the money into something else. Rather than thinking of what you can buy with money, it is necessary to view it abstractly, as nothing more than numbers, like temperature readings or gallons of gas you have left in your tank when driving on a long journey. Of course, there is actual money on the line, but it doesn't help to think of it that way. Again, it's vital to view money as percentage points or just abstract numbers that don't relate to anything tangible. If you are able to objectify capital, you can more easily maintain discipline. If you see money as nothing more than a vehicle for making trades, you will be able to avoid acting out of fear and greed. It's just trading capital. Don't see it as car payments, luxury items, or house payments. It may seem like an intellectual exercise, but it works. The more you can objectify the money you put on the line with each trade, the more you can act logically and unemotionally.
Another common reason that traders have trouble reining in their impulses is that they are tired and worn out. Self-control requires psychological energy and when you are tired, it is difficult to devote the proper level of psychological energy to maintaining self-control. You are easily distracted and even the slightest amount of stress can upset you. During these times, you may be prone to impulsive decisions. The best antidote is to get plenty of rest. The more rested you are, the more easily you can control your impulses.
Other strategies for maintaining control are useful. Avoid looking at your screen unnecessarily. It's like looking at a slot machine and trying not to play. In addition, always remember to follow a detailed trading plan; don't leave any aspect unspecified, or you'll be tempted to abandon your plan prematurely.
As much as you may think you need immediate pleasure, you don't. You can wait for a trade to come to fruition. If you wait calmly and follow your trading plan, you will increase your odds of success, and end up with a lot more profits later.
Why can we wait patiently? Part of the reason can be found in our belief systems. When we think, "I must have it now," we start to believe that we cannot wait. We believe that we cannot maintain self-control. When we see that a position has a gain on paper, we start to imagine how great it would feel to take home the profits. Even if we don't need the money at the moment, we think of how pleasurable it would be to spend our newfound wealth, and suddenly, we can't wait.
Rather than viewing money in play as actual money, it's useful to mentally transform the money into something else. Rather than thinking of what you can buy with money, it is necessary to view it abstractly, as nothing more than numbers, like temperature readings or gallons of gas you have left in your tank when driving on a long journey. Of course, there is actual money on the line, but it doesn't help to think of it that way. Again, it's vital to view money as percentage points or just abstract numbers that don't relate to anything tangible. If you are able to objectify capital, you can more easily maintain discipline. If you see money as nothing more than a vehicle for making trades, you will be able to avoid acting out of fear and greed. It's just trading capital. Don't see it as car payments, luxury items, or house payments. It may seem like an intellectual exercise, but it works. The more you can objectify the money you put on the line with each trade, the more you can act logically and unemotionally.
Another common reason that traders have trouble reining in their impulses is that they are tired and worn out. Self-control requires psychological energy and when you are tired, it is difficult to devote the proper level of psychological energy to maintaining self-control. You are easily distracted and even the slightest amount of stress can upset you. During these times, you may be prone to impulsive decisions. The best antidote is to get plenty of rest. The more rested you are, the more easily you can control your impulses.
Other strategies for maintaining control are useful. Avoid looking at your screen unnecessarily. It's like looking at a slot machine and trying not to play. In addition, always remember to follow a detailed trading plan; don't leave any aspect unspecified, or you'll be tempted to abandon your plan prematurely.
As much as you may think you need immediate pleasure, you don't. You can wait for a trade to come to fruition. If you wait calmly and follow your trading plan, you will increase your odds of success, and end up with a lot more profits later.
posted by nomadhunter at 6:18 PM
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