|
|
|
|
|
|
|
Being obsessed with keeping score does not appear to be the optimal approach to working with fear and greed. |
|
|
|
|
|
|
|
|
So, the question that arises is this: At what times is it useful to consider the score and at what times should it be the furthest thing from our minds? Take a moment before reading on and answer this question for yourself. Can you allow for the idea that score-keeping sometimes is best kept out of your mind? Or do you think this is impossible to do? |
|
|
|
|
|
|
|
|
If we're constantly thinking about preserving our capital, we will be overly cautious, fearful, and unable to take calculated risks at just those times when we need to strike. The fear of jumping in to buy when a stock has dropped fast but a floor, or resistance point, has not been firmly established is one example of this fixation. Traders say that "scared money never wins." And money that is being counted up too often tends to become scared rather easily. |
|
|
|
|
|
|
|
|
On the other side of the coin, using margin to greedily trade in larger share lots than we can really afford because of some arbitrary amount we want to make is another example. In both instances, being too concerned with the score dictates our actions. Emotionsfear and cravingrather than disciplined thinking, prevail. |
|
|
|
|
|
|
|
|
So, one way we can try to balance both fear and greed is to diminish their strength through the persistent application of clear, rational thought. With clear thinking, emotional swings between fear and greed become less frequent and less intense when they do occur. |
|
|
|
|
|
|
|
|
It is not that we expect to wipe away all emotionthat would not even be desirable if it were possible. Because knowing how we feel is important as one piece of data to be weighed in our decision making. We just don't want emotion to be what we prematurely base our trading decisions on. And we sure don't want momentary impulses causing foolish, snap decisions. |
|
|
|
|
|
|
|
|
The obsession with keeping score suggests an interesting paradox: While the whole game of equity trading is focused on earning a solid return, limiting losses, and preserving capital, at the same time being too fixated on keeping score hampers our ability to treat trading more as the serious game that it is. |
|
|
|
|
|
|
|
|
This is exacerbated by online trading program screens, where we may view an ongoing, real-time tally of our bottom line at any |
|
|
|
|
|