Emotional Mistakes and Misuse of Stops

During a trade, a trader can become their worst enemy due to the emotional investment they have in the position. This can lead to many forms of mismanagement and rule breaking, as the trader try’s to justify their actions. The below video touches on a few key points to be aware of if you find yourself in these situations, along with common misuses of the stop loss order.

Cutting Winners

Exiting positions before they reach their full potential, or before the allotted amount of time, could be the sign of something much more destructive over the long term. This video touches on key points and pitfalls of exiting a winning position early, along with how to identify the difference between planned exit vs an emotional exit.

Screen Watching

We can all sit in front of the screen for hours, watching the green and red candles with indicators flashing in our consciousness.   We think we are immune to the manipulations of the market and that we are watching just for fun.  However, ALL stimuli will make it into our brain and cause us to think, which causes us to act, mostly counter to our trading plan.  The less stimulus a newer trader can filter, the more successful they will be.

Fear

Fear in stock and option trading will often cause a trader to turn risk averse, making them hesitate with every trading decision they make. One of the many trading mistakes fear causes is a quick profit-taking out of fear that the stock market gain will vanish. There can be irrational fears such as the stock market ready to crash at any moment, leading a stock and option trader to become a perma-bear. Most often, we are worried about the last crisis happening all over again. In this session, we discuss dealing with fear as a stock and option trader and what you can do to stop the fear and become confident in your stock and option trades

Greed

We all know the saying…”Pigs get fat and hogs get slaughtered”. There is a point in every stock and option trade where a trader needs to exit based on the charts. Greed in stock and option trading will often cause a trader to take more risk when they should be holding back, making them take larger losses with every trading decision they make. One of the many trading mistakes greed causes is a staying in a stock or option trade too long, hoping for even bigger gains. Market tops and bottoms are the most risky, leading a stock and option trader to overstay trades in the end of trends. In this session, we discuss dealing with greed as a stock and option trader and what you can do to stop the greed and become consistent in your stock and option trades

Envy

Shifting focus away from yourself onto other people. This leads to an obsession with how much other people are making and can cloud your judgment. One of the 7 deadly sins.