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by Frank Kollar
The stereotype of the perfect trader (market timer) has many of
the same
traits as Mr. Spock on "Star Trek." Mr. Spock
looks at events logically and objectively, and follows a rational
plan when creating a solution to a problem.
In some ways, Mr. Spock would appear to be the ideal trader.
He would carefully formulate a detailed trading strategy, find
the market conditions that suggest his strategy will produce a
profit, and then and only then, would he execute it.
But, in the end, it is important to realize that Mr. Spock is a
fictional character. And even if he were real, he is a Vulcan; he
isn't human.
Traders are humans, however. In addition, market participants are
humans, and they don't always behave rationally. Indeed, they tend
to be driven by fear, hope, and greed, and thus, forecasting market
behavior has proven much more difficult than space travel.
In the real world, humans are emotional. Emotions rule everything
in the markets. The decision you must make, however, is whether you
are going to control your emotions in order to trade decisively and
profitably, or let your emotions rule you.
Realistic And Logical
The successful market timer is realistic as well as logical.
It doesn't do you any good to become overly disappointed when
have a loss or overly euphoric when you have a big gain.
Extreme pleasant and unpleasant emotions can be very distracting.
If you are angry, frustrated, or worried, you won't be able to focus
on sticking to the timing strategy. Your attention will be
elsewhere, and those negative emotions can cause you to make
incorrect, and usually costly, trading decisions.
It is essential to keep negative, or unpleasant, emotions at bay.
At the other extreme, it isn't wise to feel too elated or
euphoric. Extremely pleasant emotions are usually the flip side of
extremely unpleasant emotions. That is, it is usually those timers
who experience extremely unpleasant emotions when faced with
setbacks who also experience extremely positive, euphoric emotions
when suddenly faced with a huge gain.
At moderate levels, pleasant emotions are motivating, but at the
extreme, they may be associated with impulsive decisions, such as
exiting a position for no good reason or abandoning risk control
strategies.
Emotional By Nature
That said, it is almost impossible to be emotionless. Humans are
emotional by nature. It is difficult to experience absolutely no
emotion. In all likelihood, the closest we could get to an
emotionally neutral state is indifference.
So what is the best way to cultivate an optimal emotional state?
We know that negative emotions, such as fear, anger, and
disappointment can be harmful. And we know that euphoria often leads
to over confidence and timing errors.
One possibility is to cultivate emotions that are only moderately
positive, emotions that aren't euphoric and prone toward over
confidence.
Rather than react to setbacks with frustration or fear, one can
approach the setback with a sense of realistic optimism. Losses are
part of the game. There is no way around them. Market timers should
focus on the goal of generating successful gains over the long term,
not the daily or even weekly ups and downs of the markets.
Never underestimate the power of emotions. Extreme optimism or
pessimism can interfere with your goals, but by approaching problems
with a realistic sense of optimism, you will stay the course, stick
to the trading strategy such as those at http://www.fibtimer.com and
generate excellent timing profits over the years. **
** Trading involves serious financial risks. The
content provided here in is for information purposes only and should
not be construed as an endorsement or approval of the website or the
trading strategy referred by the author.
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