Take control of your emotions!


No one can say whether the paper will reach that $ 25 or $ 15. We do not know and can not know. But we can focus on two things: when and if the price will rise to $ 25 (and only then) we will perform the purchase (and only this). The same with the price of $ 15. And the rest of us for the prices do not exist.

Technical Analysis - this is an excellent set of tools that allows the trader method - a set of precise numbers, when they appear, it must produce a pre-determined action. Only in this way, through action, facilitated by, the trader can neutralize and control their emotions. Emotions, which in themselves are devastating for the trader.

"Aversion to Action"

I would like to elaborate on the part of the observed phenomenon of indecision trader or even "aversion to action." I often watched as traders rightly describe and assess the current situation, just point to the time of the action, but the action itself is not taken. As a rule, they made a purchase / sale some time in a completely unfavorable moment, and even then could not explain his behavior. Moreover, traders often just could not bring myself to act, and be seen, as they do not want to place orders. Later, they came up with the most fantastic explanation of what happened. The secret to this behavior?

It's all about emotions and method. The situation described above is typical for traders who either do not use any methods or their methods are not precise and deterministic. For example, imagine that the trader uses the following method. Make a purchase, when the parameter% R for this action is in the range of 0 to 10. And, accordingly, open a short position if the option is in the range of 90 to 100. It seems to be the normal method, nothing special. However, we immediately see that the method does not provide accurate and unambiguous information about the point of action.

In fact, it is not even a method. It's just a warning system that encourages traders to pay closer attention to this action, as it is in some particular state (overbought / oversold), and its expected probability of that state. Apparently, this is a typical system based on the idea of predicting the behavior of the market, so pure it is doomed to failure and permanent loss. Following this, I may say, the method assumes that the trader himself defines a specific point of action. And that is where his emotions and accepted for their destructive work.

For the cause of greed and fear come from

First, the cause is taken greed. Trader sees that the parameter% R reached 10. It seems that the system is "allowed" to carry out the order. But the trader sees the% R continues to decline, and the lower it is, the stronger and longer the price movement.

Therefore, the trader expects to "improve" the situation and doing nothing. "Podpuschu closer!" - He thinks. % R falls to 5 and stops at that point. Now, along with greed there is fear. And suddenly% R is no longer going down, and so will increase, and it will be missed a good situation (fear)? And suddenly% R will fall even further, and will be missed extra profits (greed)?

At any time, some of the emotions prevail, but not enough to force the trader to act. As a result of all these emotions trader usually falls into a state of near paralysis. And take it from this state can only be a strong move the stock price. Greed and sense of lost profits, fear not manage to catch the movement, as well as anger at himself for indecision - when this movement together and literally forced the trader to set the order, regardless of the fact that the situation has changed and does not correspond to that for which and meant the order.

So, for a trader is the only way to control his destructive emotions. This method - a method that gives exact numbers as coordinates action. The trader need only one - just follow the selected method. And then success will come.