My Article Database: Free Articles for Teaching and Studying English as a Foreign Language in China - by Paul Sparks




 Homepage
 About Me
 Teachers
 Students
 Lessons
 Photographs
 Links
 World News
 ICQ Chat
 Contact Me
 Articles
 
My Article Database:

 

Accounting
Acne
Adsense
Advertising
Aerobics
Affiliate
Alternative
Articles
Attraction
Auctions
Audio Streaming
Auto Care
Auto Parts
Auto Responder
Aviation
Babies Toddler
Baby
Bankruptcy
Bathroom
Beauty
Bedroom
Blogging
Body Building
Book Marketing
Book Review
Branding
Breast Cancer
Broadband Internet
Business
Business Loan
Business Plan
Cancer
Car Buying
Career
Car Insurance
Car Loan
Car Maintenance
Cars
Casino
Cell Phone
Chat
Christmas
Claims
Coaching
Coffee
College University
Computer Tips
Cooking
Cooking Tips
Copywriting
Cosmetics
Craft
Creative Writing
Credit
Credit Cards
Credit Repair
Currency Trading
Data Recovery
Dating
Debt Relief
Diabetics
Diet
Digital Camera
Diving
Divorce
Domain
Driving Tips
Ebay
Ebook
Ecommerce
Email Marketing
E Marketing
Essay
Ezine
Fashion
Finance
Fishing
Fitness
Flu
Furniture
Gambling
Golf
Google
GPS
Hair
Hair Loss
HDTV
Health Insurance
Heart Disease
Hobbies
Holiday
Home Business
Home Improvement
Home Organization
Interior Design
Internet Tips
Investment
Jewelry
Kitchen
Ladies Accessories
Lawyer
LCD / PLASMA
Legal
Life Insurance

Return to Articles about Trading

Emotions: A Trader's Worst Enemy; Get Rid of Fear and Greed - You'll be Glad You Did

by: Jonathan van Clute
Copyright 2005 Jonathan van Clute

You hear it over and over and over in books, forums, and chatrooms. Fear and greed, fear and greed, fear and greed. Emotions are a trader’s worst enemy. What are we supposed to do about it? We are human after all. Human beings have emotions. We can’t just throw a switch and suddenly behave like “Data” on Star Trek the Next Generation.

So what’s the answer for the aspiring trader?

It all boils down to 2 main components:

1. Having a plan

2. Having an appropriate trading style

You hear the first point often. Obnoxious little phrases like “Plan your trade, Trade your plan” are thrown around like it was really just that simple. But without the second part, the first part is useless. What good is a plan if you don’t know what type of plan is appropriate?

For example, you could plan your commute to work expecting to make the 30 mile trip in 20 minutes, but if you’re on foot that plan isn’t going to work very well is it? The plan was simply not appropriate for you in that situation.

There are an unlimited number of possible trading methods and styles, from chart reading to fundamental analysis, cycles to Fibonacci retracements, intra-day, Dogs of the DOW, Options, Futures, FOREX, Pork Bellies, Arbitrage – it can make you feel like your head will explode! But what you trade does not matter nearly as much as how, or perhaps why you trade.

Why do you trade?

Are you the sort who likes to play video games, loves fast action, and has no problem being glued to a screen all day? Then maybe intra-day trading 1 and 5 minute charts of high volatility equity options is for you.

Rather check your trades maybe every few days, or maybe once a week? Then perhaps swing trading currency pairs is more your style.

Prefer sleeping easy at all times, never worrying in the least about your trades because you knew up front that they would profit? Then my friend, arbitrage trading is calling your name.

Every style has its advantages and disadvantages, its risks and rewards, but most important is that the style must match the trader. If you jump into trading believing that just because someone else can do it this way, then so can you – you may be in for a very painful surprise.

Never trade someone else’s plan. Never trade someone else’s style. You absolutely must know your own temperament well enough to determine what you will trade, and exactly how you will trade it. Your money management rules, your tolerance for losses, i.e. costs, , your willingness to change the trade if your market opinion is proven wrong – these are the true secrets to trading that separate the novice from the veteran. With these in place, emotions can be reduced if not eliminated.

After all, which would put you most at ease? Driving through an unfamiliar city alone with no guidance, driving with a map, or driving with a full color street-level-detail GPS navigation system?

I’ll take the GPS, thank you.

So before you place your first, or next, trade, consider the following:

a. Do you understand what you are trading and why?

b. Do you know what you will do given any of the possible outcomes?

c. Are you ready and willing to admit you were wrong about the trade, and if so what will you do about it and when?

d. Are you comfortable with the thought of losing the money you are putting into the trade, and will your trading account survive to trade another day if you do?

These are all part of what you need to have in your plan. I urge you to have considered them thoroughly before risking the slightest amount of money in a real trade.

Emotions – “You can’t trade with ‘em, and you must trade without ‘em.”


About the author:
Jonathan van Clute is a full time investor, educator, speaker, and online options and sports arbitrage trader. In addition to his business activities, he is also a musician, video editor/animator, and one of the world's greatest Segway Polo athletes. He can be reached via email at jonathan@PMLinvestments.com and is speaking at an upcoming teleseminar, visit http://www.snurl.com/vcbiofor details.


Circulated by Article Emporium

 

New! Watch Online Articles with YouTube for Free:

 

 

 

 

Click Here to Return to Top of Page