Trade what you see not what you think

Trade What You See

When we start any new venture in any walk of life we want to make sure the foundations are secure – we want to build on rock not sand.
It is for this reason that in this module we are going to look at the motivation that gets us into the market to start with.

I have worked with a lot of traders over the years and I have examined my own trading minutely. One factor became clear and this is that many of the trades we take tend to be driven by what is happening in our own lives, not what is happening in the market.

They do not trade what they see. Instead they trade what they think or feel.
Let me give you a few examples:

In the markets less is more, and if you eliminate emotionally driven trades you are likely to much improve your bottom line.

A person who is successful in one field, maybe as an accountant, lawyer or doctor, may find his or her life lacks challenge and comes to the market looking for something that is more stimulating.
Having come to the market a trader can take a trade simply because he needed a boost – maybe he has just had an argument or was simply bored.
Often traders have fixated views on the market and can always trade the same way – this can be financially fatal.
Many people use the “emotional” or “instinctive” part of the brain as the main way of decision making in life – such people will tend to trade the same way.

In the markets less is more and if you eliminate emotionally driven trades you are likely to much improve your bottom line.

Excerpt From: “The Business of Trading.”