Fear,Greed and Money - Short Test To See If You Sabotaging

Today it’s time to talk (again) about investing and trading
and how your emotions will damage your investing and
trading returns unless you have an effective  method for
circumventing them.

I keep going back to this topic because it pretty much
determines if you make it as a trader or not. There are
lots of trading systems that work but unless you learn to
manage your emotions and trade the system you’ll never last.

So, why is it so hard to buy low and sell high (or as I like
to say “buy high” and “cash out even higher”), to cut your
losers and let your winners run?

Researchers in Behavioral Econ and Neuro-Econ have been
studying this question and have some interesting findings.

They’ve concluded that humans are initially programmed to
sabotage themselves financially. Not just in trading but in
everyday transactions in the modern economic system.

Things like buying now and paying (much) later or buying to
satisfy an emotional need rather than a real need for a product.

I continue to be amazed that people make major decisions on a
whim. Recently I was reading some of the hardship stories of
folks who’ve been unemployed for a longtime. One guy admitted
buying a car, on impulse, just before he got laid off!

He said he didn’t really need a new car and knew he should be
building up his savings but he went shopping one day and came
home with a new $30,000 car.

The worst part is that he suspected that he might be laid off.
This kind of thing just blows my mind every time I hear about
it.

So, I propose you try living with these two rules:

Rule #1: Don’t make buying decisions when you’re excited.

Rule #2: Don’t make selling decisions when you’re afraid.

Here’s why: When you make a money decision when you’re “under the
influence” you will self-sabotage most of the time.

Emotional decisions tend to be poor financial decisions and
expensive mistakes.

Prove it yourself. Test yourself.

Think of a time when you bought something “on impulse” - when you
were very excited - and you wound up regretting it later.

Think of a time when you sold something when you were fearful, and
it wound up costing you big in the long-run.

Think of a time when you made a financial decision without getting
advice and input from a mentor or trusted friend who had more
experience and expertise in the area than you did - and you wound
up making an expensive mistake.

After you’ve come up with a couple examples of your own, decide
what you’d do differently if you were following our two rules and
remember this next time you have an impulse to buy a new car, or
when selling a home or boat.

The ETF Trend Trading system I developed automatically takes
excitement and fear out of the mix by only making trading decisions
when the market is closed. Plus it’s a 100% mechanical system so
there is never a “feel like this trade” decision to make.

As you progress as a trader, you may be able to trade during the
market hours, but executing the system trades without letting fear
and greed (or excitement) cloud your judgment is an ongoing battle.

We must remind ourselves of the rules and monitor our behavior to
guard against sabotaging our trading.

The rewards are great, if we can delay gratification and stick to
the plan.

 ( The ETF Trend Trading system )