As of 04/18/2024
Indus: 37,775 +22.07 +0.1%
Trans: 14,947 -39.62 -0.3%
Utils: 860 +6.95 +0.8%
Nasdaq: 15,602 -81.87 -0.5%
S&P 500: 5,011 -11.09 -0.2%
|
YTD
+0.2%
-6.0%
-2.4%
+3.9%
+5.1%
|
 39,800 or 37,150 by 05/01/202416,200 or 15,000 by 05/01/2024885 or 850 by 05/01/202416,700 or 15,800 by 05/01/20245,250 or 5,025 by 05/01/2024 |
As of 04/18/2024
Indus: 37,775 +22.07 +0.1%
Trans: 14,947 -39.62 -0.3%
Utils: 860 +6.95 +0.8%
Nasdaq: 15,602 -81.87 -0.5%
S&P 500: 5,011 -11.09 -0.2%
|
YTD
+0.2%
-6.0%
-2.4%
+3.9%
+5.1%
| |
|
39,800 or 37,150 by 05/01/202416,200 or 15,000 by 05/01/2024885 or 850 by 05/01/202416,700 or 15,800 by 05/01/20245,250 or 5,025 by 05/01/2024 | ||
In some of the trading psychology articles I wrote, it's useful to imagine what will happen in a trade. That's important to keep your spirits up, your confidence high, but it can also cause problems if you get carried away. If you imagine that this trade is going to make you a million, it just might, but that type of thinking could blind you to what the charts are saying.
The flip side of this is the negative expectation: Every trade I make is going to lose. Such pessimistic thinking can lead to disaster when you subconsciously sabotage your trades to make it come true.
Trading involves having a positive attitude and a realistic expectation. Here are some examples that could cause problems.
Many traders that speculate about what will happen in the future become burdened with anxiety.
Basket Case Bob is an example. As a child, Bob lived in a rough neighborhood in which robbery, muggings, theft, and even shootings occurred frequently. Those too weak to defend themselves were often the target of such attacks. His outlook on life took on a paranoid flavor, as if the next step would be his last.
When he started trading, his life experience influenced his behavior in the markets. He was always worried about the big boys taking him out by moving price against him. Each trade he placed was like an expectation that he would be robbed. The more he perceived the treat of loss, the closer he placed his stop loss orders until they hugged price so closely that he was stopped out for small losses and small profits. The trade couldn't gain traction.
This negative thinking prevented him from following his own trading plan for very long. By reviewing his trades, they showed his trading plan would have led to large gains, but he just couldn't get over his negative expectations of the future.
For Bob, being overly cautious, pessimistic, and even paranoid was a way for him to feel comfortable, even happy, certainly safe. Breaking that habit was a challenge because it involved changing unconscious beliefs and his world shaped by experiences of a lifetime.
The cure was to change some of his associations. It's a lot like saying to a dog, "Come here!" and when it does, you slap it. Soon, it learns to stay away.
How do you change that behavior? Replace negative associations with positive ones. For a dog, say "Come here!" in a cheery, welcoming voice, and give him a treat when he does. Soon, he'll be wagging his tail when you call.
The key to changing Bob from a paranoid pessimist was to have him focus on something more important to him than the safe and comfortable feelings his negative thinking aroused. That something was the memory of his mother. She didn't want a life of luxury, rather, she wanted only the best for Bob. Her dream was to see him become confident, successful, and happy.
Bob only needed to associate his optimistic success with the fulfillment of her dream: that of him becoming happy and successful instead of worrying about traders lurking around dark corners, waiting to ambush him and steal his lunch money.
On the opposite side of the scale are the optimists, those traders who believe that every trade is going to be a big winner. They are the ones counting their millions as soon as the trade begins.
Belief in a positive outcome is necessary for success, but it has to have a firm foundation, such as a well-tested system, years of experience, or knowledge gleamed from hard work.
If you are pessimistic, feeling that every trade is destined to fail, or overly optimistic as if every trade will add to your millions, here are some steps you can take to become better grounded.
Negative thinking sabotages your trading as does the unrealistic belief that every trade is going to make you millions. Being optimistic about your trading is the best approach, but only in moderation. You have to make the effort to become successful. The markets will not hand it to you.
-- Thomas Bulkowski
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