2. Mastering Emotions
There are two opposite emotions that constantly control the actions of a day trader. They are by far two of the most powerful emotions that must be in harmony and fit together as closely as a lock and a key. Too much of one will cause you to loose...too much of the other prevents you from maximizing your gain.
These two emotions are Greed and Fear.
Greed is interwoven into the capitalistic fabric of our economy. Without greed, there would be no profits, no incentives for workers, no stock market, no improvements in technology or productivity, and no medical research. The search for a cure to cancer is driven by greed. If you think that all these corporations and researchers are seeking a cure for AIDS out of the kindness of their hearts, then you are misjudging the power of the almighty dollar. There's one other thing that wouldn't exist without greed...and that is gambling.
It's the closest(and the most legal)way of getting something for nothing; of extracting the surplus value of someone elses labor. I invest in equity options for the same reason I gamble...I am greedy, I want more, and I want it now. Immediate gratification is the opium of gambling(and day trading). I feel the same "thing" when I win 4-0 on Sunday as I do when I turn $1,000.00 into $1500.00 on Monday. But it is Greed in excess that will haunt you. Greed is stimulated by overconfidence. In my early years trading I would allow greed to consume me after posting gain after gain for several weeks. I was cocky enough to think that I was somehow "smarter" than everyone else and I just couldn't lose. I would schuck aside everything I had read and learned from the masters and plunge foreward into the glory that I knew awaited me...and all I would find was my Waterloo. I would feel foolish to tell you not only how much my greed cost me, but how often I LET it cost me.
In gambling I have a simple system that works for me. I also try to follow money management methods that I learned the hard way as a Greedy Novice. I never lay more than 6% (and usually 4% or less)of my bankroll and never, NEVER have more than 5 positions open at one time. This discipline is all that saved me from a complete meltdown in the market...and has done a nice job of preserving my gambling capital. As in trading, I try to win a little bit every day...and not risk it all to win it all.
In gambling (and trading)I try to win or gain)10% per week on my bankroll. That's only 1.5% per day. At 1.5% compounded per day you would double your money in 47 days!
You have to be Greedy enough to have patience! Immediate gratification is dominant in unsuccessful traders, broke gamblers, and most two year olds.
Back in a bit with the rest on FEAR
There are two opposite emotions that constantly control the actions of a day trader. They are by far two of the most powerful emotions that must be in harmony and fit together as closely as a lock and a key. Too much of one will cause you to loose...too much of the other prevents you from maximizing your gain.
These two emotions are Greed and Fear.
Greed is interwoven into the capitalistic fabric of our economy. Without greed, there would be no profits, no incentives for workers, no stock market, no improvements in technology or productivity, and no medical research. The search for a cure to cancer is driven by greed. If you think that all these corporations and researchers are seeking a cure for AIDS out of the kindness of their hearts, then you are misjudging the power of the almighty dollar. There's one other thing that wouldn't exist without greed...and that is gambling.
It's the closest(and the most legal)way of getting something for nothing; of extracting the surplus value of someone elses labor. I invest in equity options for the same reason I gamble...I am greedy, I want more, and I want it now. Immediate gratification is the opium of gambling(and day trading). I feel the same "thing" when I win 4-0 on Sunday as I do when I turn $1,000.00 into $1500.00 on Monday. But it is Greed in excess that will haunt you. Greed is stimulated by overconfidence. In my early years trading I would allow greed to consume me after posting gain after gain for several weeks. I was cocky enough to think that I was somehow "smarter" than everyone else and I just couldn't lose. I would schuck aside everything I had read and learned from the masters and plunge foreward into the glory that I knew awaited me...and all I would find was my Waterloo. I would feel foolish to tell you not only how much my greed cost me, but how often I LET it cost me.
In gambling I have a simple system that works for me. I also try to follow money management methods that I learned the hard way as a Greedy Novice. I never lay more than 6% (and usually 4% or less)of my bankroll and never, NEVER have more than 5 positions open at one time. This discipline is all that saved me from a complete meltdown in the market...and has done a nice job of preserving my gambling capital. As in trading, I try to win a little bit every day...and not risk it all to win it all.
In gambling (and trading)I try to win or gain)10% per week on my bankroll. That's only 1.5% per day. At 1.5% compounded per day you would double your money in 47 days!
You have to be Greedy enough to have patience! Immediate gratification is dominant in unsuccessful traders, broke gamblers, and most two year olds.
Back in a bit with the rest on FEAR
