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Steve and group,
Greed or probably more accurately avarice is defined as: excessive or
insatiable desire for wealth or gain. I suspect that most traders bring a
desire for quick wealth with them when they start trading. Most of the
product vendors promise instant wealth. The fact is that many aspects of
trading are very attractive or most of us wouldn’t be here would we. A
respected man once said that to look to get wealthy trading is a mistake.
As with any business only a few will be that successful.
The psychological aspects of greed are the problem. Holding on to a trade
too long or not long enough is usually the result. Can your greed work for
you? By the definition probably not. As a desire to trade successfully
maybe so. Knowing when to hold ‘em and when to fold ‘em really is an art.
You can use many different types of guidelines such as Fibonacci extensions
to give you a target to shoot for. This type of control is probably the
best answer to greed.
Regards,
Brent
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> From: Steve80866@xxxxxxx
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Subject: Psyche: Pulling Trigger; Part 2
> Date: Wednesday, August 19, 1998 2:49 PM
>
> Realtraders,
>
> Having received positive feedback on my first offering on this subject I
have
> been thinking further. I've also scanned the self-help books to see what
is
> being advised on the subject of fear. Unfortunately, what I find in
these
> books frequently reflects our culture's desire to avoid troublesome
feelings.
> Often, the advice says that fear is an impediment and just root it out
and get
> rid of it.
>
> I don't believe it works this way. Fear is a valuable indicator giving
> information that the trader needs. Two years ago I paper traded an
optimized
> stochastic system for 4 months. In those 4 months it accrued 200%
profits.
> But when it came time to trade it real time I was unable to pull the
trigger.
> Pop psychology would've had me pushing through the fear and doing it
anyway.
> But what I discovered under the fear was my lack of belief in the system.
It
> just didn't make gut level sense to me. It's a good thing I didn't trade
it
> real time. In the months ahead the system really tanked. It turned out
it
> couldn't handle the major trend changes that occurred. Two years later I
now
> am starting to trade another system that does make gut level sense to me.
> There is no significant fear of pulling the trigger this time around, and
the
> system is now paying off in real time.
>
> There are at least two possible pieces of information that our fear of
pulling
> the trigger can give us: 1) we are not psychologically ready to trade
for
> some reason, or 2) there is something wrong with the trade setup that our
> unconscious recognizes. Either of these is crucial information. If
there is
> something wrong with the trade we need to discover what it is so the
mistake
> is not repeated. If there is something wrong with our trading readiness
then
> we need to acknowledge it and back off until it passes, or discover its
roots
> and do the personal readjustment necessary before resuming trading.
>
> And how to know the difference between the two? Start off assuming both
to be
> true and look for the possible causes: What's wrong with this trade? Do
I
> really know the odds? Am I bending my systems rules? Am I taking in too
much
> or too little information? ... What's wrong with me? Too much stress
with my
> spouse or children or paying the bills? Have I done enough research to
really
> believe in my system? What's different now from when I've traded without
the
> fear. If I've never traded without the fear, then am I suited to
trading?
> Or, have I not really, really done my homework and my trading is more on
the
> side of gambling? Fear would be appropriate in this case!
>
> My hope is that you will profit from an insightful look at the fear you
feel
> when you put on a trade. You might scale it from one to ten and then
examine
> how much fear you felt with trades that worked and those that didn't, and
with
> those where you followed your system and those where you didn't. See
what you
> can learn about yourself and how you trade. See if your fear knows
something
> that you don't!
>
> Hmmm... Wonder what we could learn from our GREED?????
>
> Psychologically,
>
> Steve
>
>
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