Trading psychology

 by Maria Jane Poncardas, 2/28/2022


    Countless of advises have I learned about the importance of psychology in trading. Estimates show that trading is 95% psychology, 5% execution. The factors may include emotions, decision making and among others. Emotions may be the huge contributor especially the fear and greed. It is typical to hear these from traders in YouTube as they themselves experienced such. I also recognized these emotions on my trading journeys, as I already blew quite a number of trading accounts, from penny stocks, local stocks, options trading, and cryptocurrencies. But that did not stop me from learning to trade. I persevere, regardless the number of failures, since this is a lifetime skill, once refined would be worth the effort.

    My priority in learning to trade nowadays is the psychology. One of the favorite lines I have learned this week is: "Euphoria is the most dangerous mindset in your trading". I thought this may be categorized as greed. It is one of the things I learned from Rande Howell hosted by Etienne Crete (video). I was surprised to learn that I was not able to recognize this in the past. Back when I was trading Philippine stocks, I was able to ride the institution's pump of a penny stock (PSE:AR), and from there on I was able to gain 50% of my investment, and had a streak of gains from other stocks. Because of that, I feel superb and hyped up (and felt like a genius) to buy more trending trades. By then, the typical thing happened: I returned all the profits to the market.

    Rande Howell's thought, euphoria may make you feel empowered, but it becomes a problem long term. While writing this, I recalled one popular trader in Japan: Takashi Kotegawa. He was popular by not having emotions at all in trading. When he wins millions, he does not jump with joy like what I thought I would do, nor celebrate his gains... it is just a typical day to him. When he loses, he does not feel grief. When there is a sign of euphoria in our mind that must be a bad omen to us.

    This led me to thinking, would there be a system that does not require decision making nor emotions to trading? How did they make themselves consistently profitable without experiencing joy nor grief?

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