Module 12 Innerworth — Mind over markets

Chapter 289

Getting Even With the Markets

Trading decisions are frequently influenced by fear, hope, greed, and regret.  But, sometimes decisions are motivated by anger.  After a losing trade, you’ve probably heard people say, “I’m going to get even with the markets.”  Perhaps, you have said this yourself.  The need to get even and seek revenge is a reflection of anger.  People experience anger when they feel that they have been unfairly wronged.  Traders become angry at the markets because they believe that the markets and the people involved in the markets should make their investment profitable.  When the profits don’t materialize, they implicitly or explicitly believe that the markets have wronged them.

 

Anger can be a dangerous emotion.  When people are angry, they are ready to put up a fight.  They focus all of their energies on fighting, seeking revenge, and looking for any sign of provocation.  It’s hard to think clearly when one is angry.  Sound decision-making requires the avoidance of such emotions.

There’s no reason to be angry at the markets.  It’s important to recognize the reasons for our anger.  By doing so, we will feel less anger in the long run.  Here’s how you can be less angry at the markets.

Don’t personify the markets.  Anger is an interpersonal emotion.  We are usually angry with someone because we believe that he or she has purposely tried to harm us.  The markets may consist of people making trades, but it doesn’t make sense to treat the markets as an interpersonal setting.  The people participating in the markets may engage in actions that thwart your goals, but their actions are not directed toward you personally.  It is best to look at the markets as an abstract impersonal entity, rather than a collection of people.

Eliminate Preconceptions.  Anger is felt when our expectations have been shattered.  One expects to profit from a trade, and when the profits are not realized, he or she may become angry, seek revenge, and want to get even.  However, it isn’t useful to have high expectations in the markets.  Don’t depend on the markets to fulfil your goals or meet your expectations.  Assume that anything can happen.  Indeed, in dealing with the markets, it’s almost a given that you will lose money, so it is not useful to expect to make money on every trade.  Just accept what you can get.  Eliminate any preconceptions you have regarding the outcome of a trade.

Accept Losses.  People have great difficulty accepting a loss.  The old adage, “Cut your losses short and let your profits run” reflects traders’ inability to accept a loss.  However, if you cannot accept a loss, you will feel anger and want to get even.  Expect to lose and be ready to accept losses.

Following these guidelines will help you manage your anger.  If you can manage your anger, you will feel less stress, make more rational decisions, and enjoy trading.

 

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