Trading can be an exciting profession. It’s exciting to think of how much money you can make, and how that money can change your life. Some traders enjoy anticipating how a trade will turn out, while others enjoy the rush that trade offers. Still, other traders say they actually feel bored during the trading day. Sometimes trading isn’t exciting. It is a matter of waiting for the right moment, and that can be boring at times. It is at these times when traders may overtrade, just to put a little excitement in their lives.
Market behaviour of the masses is motivated by fear and greed. There is an asymmetry between fear and greed, though, in that a loss is more fearsome than again is pleasing. But, nevertheless, these emotions can be exciting. Market participants may not enjoy the unpleasant feelings of a possible loss, but a fact of trading is that to make money, one has to risk money. Greed overcomes fear in the end. Market participants trade to make profits, but they often sell out of fear.
Trading is often an interplay between fear and greed, which in itself is a dramatic interplay. Market participants enjoy the drama. To fight off tedium and boredom, they trade, even when it is a very good idea. The drama can be intense. Market participants become excited about winning but get scared about losing, and sell to protect what they have left. But then boredom sets in again. The desire to make big profits excites them, and they enter the markets again. And so the drama repeats over and over.
It is useful to understand the motives of the masses and see the irrationality of their behaviour. By seeking out thrills and excitement, they will buy stocks but sell them prematurely for a loss, out of panic. When it comes to trading, you must decide which side of the drama you want to be on. Do you want to be one of the masses acting on fear and greed, or do you want to be one of the few winning traders who capitalize on the tendencies of the masses? As a trader, you can be right there, ready to take their money.
While they buy and sell stocks to add drama to their lives, the professional trader can anticipate how they act on their fear and greed and make money from their predictable moves. But on the other hand, it’s vital to acknowledge one’s own powerful need for drama and excitement. A professional trader is just as human as an amateur trader, and thus, has a need for drama and excitement in everyday life. Everyone needs drama and excitement, but it is vital to keep these needs out of your trading life. Trading can often be tedious, repetitious, and boring. One must systematically execute a trading strategy consistently, over and over.
It’s a mistake to fall prey to the need to seek out drama. The solution? Make sure you get your drama and excitement in a different arena, outside of trading. If you satisfy this need somewhere else, you can deal with the relatively boring and repetitious nature of methodically trading your plan. The markets are exciting and offer drama, but make sure that you stay professional, and don’t let the drama of the market undermine your trading plan. The more you can trade with an objective mindset, the more profits you’ll realize.