Seven Deadly Sins of Trading
December 20, 2006 by Trader Rich
I've been having issues lately with closing out positions before they reach their profit objective or stop loss, no doubt the product of fear. When I first started trading, I heard other traders mention the words fear and greed and laughed at their use in this context. I'm not laughing anymore because there is no question how these emotions affect your trading in a negative way. Is it in my or your best interest to suppress these emotions or to recognize, identify, and face these emotions? I think it's time for me to read Douglas' book again, Trading in the Zone where he constantly reinforces the necessity of eliminating emotions from trading.
I came across another book where the author lists the 7 deadly sins of trading (Overcoming 7 Deadly Sins of Trading by Ruth Barrons Roosevelt). It is quite accurate but how do these emotions affect my trading now?
- Fear - like I've just mentioned, fear plays an integral part in my trading, something I must fix.
- Greed - I don't feel like this is a problem for me right now. I believe that I have realistic objectives that do not contribute to this.
- Recklessness - I think I do get a touch of recklessness in my trading from time to time, like getting rid of my stops on Friday. This is something that can be very destructive so I cannot dismiss 1 episode as unimportant.
- Perfectionism - I'm not trying to be perfect. I understand that losses are part of trading.
- Pride - Are you attaching your ego to each event or situation? I don't think I am.
- Anger - I think I can sometimes get angry at things that I did when I know that I shouldn't have.
- Impatience - Definitely guilty of this.
I've got some work to do.
I did overcome the fear this morning and let a trade breath a bit by flat out leaving my computer for an hour. I came back to 90 pips of profit.
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