One of the smartest things I have ever done was to learn to ignore my emotions. Part of that comes from maturity, but part of that also comes from one’s own ability to look at the bigger picture. One of the greatest errors a trader can make is to try to recoup his loss. That can mean doubling up when you should be cutting your loss, or overtrading.
Overtrading occurs when the market is not moving. Price ranges contract and volatility slows down. So, we try to come up with ingenious ways to make money, because we always want to be making money. We always want results. So, we start trading the range and taking bigger positions. If you’re one of those people – don’t do it. The only thing this leads to is stress. Your profits are not only likely to be small, but you will end up taking far bigger exposure than you would otherwise, and if the market start to really move, the small gains you have slowly accumulated can be wiped out within a single day, because your positions are so large. The only winner in that scenario is your broker. So if you hate to see him make more money than you, do the right thing: close your eyes, take a deep breath, and wait for that move to come. This is especially hard because you are looking at prices all the time and not doing any trading. That’s like sitting at the edge of the playground and not being allowed to play.
Yes it’s boring, but which would you rather be: the leopard that waits til the zebra comes to it, or the one who spends his life running around chasing it?
