Fear, Greed, and Regret - The Killers Of Your Equity

Clint J. passed this article on to me and I want to share it with all of you. It is particularly relevant in the current market conditions.

Emotions of fear, greed, and regret are driving the market these days. Greed drives the masses to trade rather than stand aside until the dust settles. With each new piece of news, the masses buy on good news, sell on bad news, and regret their decisions, and thus, buy and sell to "undo" what they see as a mistake. If you want win in these chaotic markets, however, you can't let trading emotions influence your decisions.

Market action is powerfully influenced by fear and greed. But many traders allow disappointment and regret to make throw them off track. We feel isappointed when our trades fail to meet our expectations. We feel regret when we think that we have made a poor decision that could have easily been avoided. There's an assumption that underlies both emotions: We may believe irrationally that as traders we must always be right and that trading outcomes must meet our expectations. Unless our expectations are met, we believe it's terrible, awful, and unacceptable. This core assumption, however, can be questioned. And by doing so, you will be able to cultivate a peak performance mindset more easily.

It may be unpleasant, or an inconvenience, when our expectations are not met, but it isn't so terrible, awful, or unacceptable. By merely changing our perspective on this issue, we can change how we respond emotionally to trading setbacks. If we believe the events these days are terrible and awful, then we are going to be prone to experience extreme feelings of disappointment and regret.

However, if we assume that setbacks and losses are inevitable, we will be prepared to cope with them. We will come to expect them, and we are likely to think that they aren't as terrible or as awful as we had assumed they might be. By taking an anticipatory approach to trading, not only can we rein in our emotions, but put a trade in the proper perspective. If you trade in chaotic times like these, you are bound to be wrong part of the time, and you might as well accept your fate. Once we accept this fact of trading, we will be able to see that setbacks aren't as terrible and devastating as we had thought. They are just part of the game. There's no point in overreacting. With the proper perspective,
you can survive these chaotic times. From - MarketWise

I hope this gives you some food for thought and helps you trade smarter and better.