The Bull Hunters Guide

Your biggest enemy, when trading, is within yourself. Success will only come when you learn to control your emotions.
Edwin Lefevre’s Reminiscences of a stock operative (1923) offers advice that still applies today.

Hello Fellow Bullhunters

A little about the psychology of trading is our topic for today. What happens when you begin to trade is that it becomes an expression of your own personality. You take it on originally thinking it is all black and white when instead, as you become more involved with the process, you start to form a kind of love affair with the market and find your favorite stocks and treat them as your very own. STOP RIGHT THERE…

In fact, when this happens, your emotions start to come out and rule how you trade. Becoming emotionally intelligent is a very important step to take at the very beginning. You see, good trading is not a question of doing, rather, it is a way of being. To learn more about Emotional Intelligence, go here to explore Jamie McIntyres ebook: What I Didn’t Learn At School But Wish I Had.

When you trade with your emotions you enter into a downward spiral so do not put yourself under too much pressure because you will fail. It’s important to learn to risk because without risk there is no reward. The minute you become risk orientated you are in the right frame of mind for trading the market.

Develop your own style of trading in a way that you stay detached from it. It is a good idea to start with small trades i.e. one contract at a time. See where this takes you and always, always record every step of what you are doing. This will tell the story of your trading personality.

A trading register will have your buy and sell price, the date you entered and exited. Also write down if the dog next door was barking at the time you chose to do that trade. Why you decided to take the trade. The profit/loss you made. Where you set your stop loss at. All these things and more will reveal your trading personality once again so review your register at any time and you will know straight away whether or not you are an emotional trader.

Wait for the right market conditions before trading. There are times when it is wise to stay out of the market and observe from the sidelines. Do not enter every single trade you see. Do not become a screen watcher and get up to the minute prices of your stock. Set yourself up so that there will be no need for this. You have a life to live… don’t you?

Have the courage of your convictions: Take steps to protect your profits when you see that a trend is weakening, but sit tight and don’t let fear of losing part of your profit cloud your judgment. There is a good chance that the trend will resume its upward climb if you are bullish in a trade, or downward spiral if you are bearish in a trade.

I would like to acknowledge Hans Kujat, a fellow 21st Century Academy Graduate who made the suggestion for this weeks topic.

There is plenty to learn about trading and I am here to help you on that journey. For those of you who wanted to leave me a comment last week and couldn”t because of the challenge of a technical hitch with the software, I invite you back now and look forward to hearing from you.

Angela Recchia
Graduate Support
Universal Wealth Creation © 2004 - 2007

Social Bookmarks:

This entry was posted on Thursday, April 19th, 2007 at 4:44 pm and is filed under Bearish, Bullish, Emotional Intelligence, Market Conditions, Stock Market, Trading Phychology, Wealth. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.