Top 3 Things Traders Do To Sabotage Their Trading

Some of you may know that my wife is a Marriage and Family Therapist (and no, I don't win many arguments at home - thanks for asking).

She knows me well, though, I have to admit that.

My wife: "Tim, you have certain "issues" that you really need to work on."
Me: "Yes, Dear, I'm aware."
My wife: "And I bet they affect your trading, so you might want to get a handle on them."

In cases like these where she knows I need my "emotional medicine" but I refuse to take it because I loathe the psycho babble, she "re-phrases" it to apply to something she knows is important to me.

Well, now I'm going to do the same thing for you...

I just finished reading an e-Book by a guy named Jeffrey Kennedy. One of the things he discusses is "emotional pitfalls." Now before you gag on your donut because you've heard that a million times, stay with me.

He also takes some of the best lessons he's learned over the years
and puts it into actionable steps anyone can use to improve their trading.

If you're guilty of doing these 3 things (and we all have been at one time or another), you've left money on the table (or in the market, in this case).

By the way, download your own copy at the link below for the low price of $0 (you do create a profile for their free "club" but it takes just a few seconds):

14 Actionable Lessons in Trading

Let's just call these "Certain issues we all have that sabotage our results." However you phrase them, they hold us back from making more money so let's get right to it.

1. "Swinging For the Fences Every Time" Syndrome
from 14 Actionable Lessons in Trading:

To be a consistently successful trader, the most important trait to learn is emotional discipline. I discovered this the hard way trading full-time a few years ago. I remember one day in particular. My analysis told me the NASDAQ was going to start a sizable third wave rally between 10:00-10:30 the next day... and it did. When I reviewed my trade log later, I saw that several of my positions were profitable, yet I exited each of them at a loss. My analysis was perfect. It was like having tomorrow's newspaper today. Unfortunately, I wanted to hit a home run, so I ignored singles and doubles.

I now call this emotional pitfall the "Lottery Syndrome." People buy lottery tickets to win a jackpot, not five or ten dollars. It is easy to pass up a small profit in hopes of scoring a larger one. Problem is, home runs are rare. My goal now is to hit a single or double, so I don't let my profits slip away.

2. The "Shawshank Redemption" Syndrome

(What, you haven't seen that movie yet? Stop trading immediately and go to NetFlix and rent it - now.)

Hope is a very dangerous thing in trading. Shawshank Redemption = hope is good. Trading = hope is very very bad.

from 14 Actionable Lessons in Trading:

Have you ever held on to a losing position because you "felt" that the market was going to come back in your favor? This is the "Inability to Admit Failure." No one likes being wrong and for traders, being wrong usually costs money. What I find interesting is that many of us would rather lose money than admit failure. I know now that being wrong is much less expensive than being hopeful.

3. The "I'm the Only Trader in the World Who Isn't Killing it Today" Syndrome

(This syndrome is most commonly caught by traders watching StockTwits too much while people "tweet" about how much $ they just made on this stock or that option)

from 14 Actionable Lessons in Trading:

Another emotional pitfall that was especially tough to overcome is what I call the "Fear of Missing the Party." This one is responsible for more losing trades than any other. Besides overtrading, this pitfall also causes you to get in too early. How many of us have gone short after a five-wave rally just to watch
wave five extend? The solution is to use a time filter, which is a fancy way of saying wait a few bars before you start to dance. If a trade is worth taking, waiting for prices to confirm your analysis will not affect your profit that much. Anyway, I would much rather miss an opportunity then suffer a loss, because there will always be another opportunity.

This emotional pitfall has yet another symptom that tons of people fall victim to chasing one seemingly hot market after another. For instance, metals have been moving the past few years so everyone wants to buy Gold and Silver. Of course, when everyone is talking about it is usually the worst time to get into a market. To avoid buying tops and selling bottoms, I have found that it's best to look for a potential trade where (and when) no one else is paying attention.

Amen, brother. So there you have it. I'm still guilty of these things from time to time - every trader is.

Go get your free copy now and take your medicine!

All the best,

Tim

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Tim Bourquin
TraderInterviews.com
1-949-348-2590 ext. 15

P.S. I didn't even get to talk about all the great Elliott Wave
stuff in his e-Book too. Go get it now:
http://www.traderinterviews.com/out/pitfalls
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