Focus your energy on what’s important
Letting go of the outcome
You cannot control the outcome, but you can control your actions and emotions
Do not focus on the $ and P&L fluctuations
Sports analogy: Don’t focus on the score!
Big…
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Do not take profits until there is a good reason to do so
The Chicken parable
Do not count your profits until they are realised
Accept that you will have to give some profits back to the market
Do not become complacent or greedy after a…
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Trade what you see, not what you think
Being objective despite having open positions
Anticipate, but only act when market confirms your opinion
When you see danger, get out first!
Clear all positions to have a neutral frame of mind
&…
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Many new to trading have the tendency to liquidate positions that show a small profit, yet they keep those positions that show a loss as are unwilling to take a loss, in hope that prices will rebound.
Such a counter-intuitive strategy will…
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Timing is an essential element in trading and investing.
For any product or market, if you buy and sell at the right time, you can make a lot of money, but if you get the timing wrong, you can also lose a lot of money.
And to get this…
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Knowing all the different cognitive biases and dangers of emotional decision-making can make us more aware of whether we are thinking logically and making the right decisions.
But it can hard to be on 100% alert all the time, especially on…
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To help traders and investors overcome the problem of emotions in decision-making, the first step is to be aware of the situations in which we might exercise flawed thinking, in the form of cognitive biases.
Cognitive biases are systematic…
In classical finance, traders and investors should always make rational decisions to maximise their self-interests, but in practice, quite often they end up making decisions that are not always rational, due to the influence of emotions and…
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In the game of trading and investing, the goal is not to make once-off huge bets and have large swings in your portfolio based on your luck.
The ultimate goal is to achieve consistent returns over the long-run.
And to achieve this consistency,…
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