Post by
Red_Deer on Mar 24, 2007 5:27pm
HOPE................
I thought that this weekend's STOCKSCORES Newsletter about market pyschology is rather appropriate here. I know that, for me at least, regular reminders such as this one every weekend have saved my bacon countless times and sharpened my focus by eliminating the many hazardous distractions out there, especially on speculative penny pony discussion boards such as this one.
https://www.stockscores.com/newsletters.asp?subpage=viewnewsletter&id=16196
Wishful Thinking
Stockscores.com Perspectives for the week ending March 23, 2007
Wishful thinking. It drives the lottery business and billion dollar casinos in Vegas were built on it. Wishful thinking is why we take out the driver to cut the corner over water instead of taking the long way round. It is why there are a lot of golf balls in the bottom of that lake.
Are your stock market buy and sell decisions guided by wishful thinking? You may not think so, but a common trap that investors fall in to is letting their hope affect their perceptions and ultimately their trading decisions. Sometimes we see what we want to see rather than what is really there.
When you own a stock you will tend to pull out the positive aspects of the company story to support your position. If you have just suffered a loss on a previous trade you might see things in the next trade that justifies an entry, your decision more motivated by the desire to make back your recent loss than anything else.
To be a disciplined investor requires you overcome selective perception when evaluating opportunities. You have to make decisions on what is there and not what you want to be there. You have to be honest with yourself. Your bank account will thank you for it.
How do you do it? First you need to know what you are looking for. Write down your rules for entry and your rules for exit. Be very detailed, capturing all aspects of your trading strategy.
Now, when you are evaluating a stock make a point of breaking down what you see. Write down what you see, somehow the process of writing it down will keep you honest. If you need to, draw lines on the stock chart to support your evaluation of the chart. If you see rising bottoms on the chart, draw a line showing them. Make sure you can't draw the opposite.
You now have two lists. One is your rules; the other is what your stock is showing. If the two match, you have to take action. If one of these things is not like the other then you have to pass. Don't tell yourself that it is ok to break the rules.
At this point you may be saying that all of this is silly and you are not one of the people who imagine things. I am here to tell you that you are wrong; so long as we are normal human beings we are capable of falling in to this trap.
The problem is, trading is emotional and emotion makes us hope. We hope to avoid losses. We hope to make profits.
HOPE stands for How Ordinary People Lose Everything.
OK, that is HOPLE, but you get the idea.
When you write down what you see and break what you see down in to pieces you will find you see a lot more than you thought was there. It will inspire confidence and make you a better trader. Go grab a pen.
Comment by
Tommer3 on Mar 24, 2007 5:55pm
Hi Red_deer,
Is it not true the inventor, creator or who designed the Stock Stores is based out of Red Deer? I know we have shared correspondence in the past about this program, however that aside, are you still looking over Iciena, or did you take the plunge?
Been awhile --- but timing is everything. Hope are investments in Iciena pan out too be GREAT!
Regards,
Tommer3