Conquer These Three Negative Trading Emotions

The Penny Sleuth Features: Penny Stocks, Options and High-Growth Opportunities! Conquer These Three Negative Trading Emotions By Greg Guenthner January 26, 2011 Dear Penny Sleuther, “The principles of successful stock speculation are based on the supposition that people will continue in the future to make the mistakes that they have made in the past.” — Thomas F. Woodlock The quote you just read appears in the timeless investing tome Reminiscences of a Stock Operator, a fictionalized account of the life of trading legend Jesse Livermore. Livermore was known to have one of the greatest trading minds of all time. Yet he managed to make and lose multi-million dollar fortunes multiple times because he fell prey to his own emotions. 6 Penny Stocks to Own Right Now… Greg Guenthner, editor of Penny Stock Fortunes is giving away SIX penny stock recommendations to all new subscribers! But you must hurry because these plays could explode at any time. Click here to watch the presentation now. Even the most brilliant traders in the world make mistakes. Not only do they lose money occasionally, they tend to make ill-advised trades over and over again. Anyone who claims anything different is probably full of something other than trading profits... The problem with stock speculation is that traders are human beings, and therefore rely on the same, predictable emotions as everyone else in the world. This is what makes trading patterns easier to predict, and how the majority of traders make money. However, when you capitalize on the emotions of the herd, you need to be careful to not get swept into any bad decisions that could hurt your bottom line. To help keep you on track in your own trading, I’ve detailed three common trading emotions, along with how you can avoid the pitfalls — and trading losses — that go with them. Uncovered: How to Turn $500 into $15.1 Million Your “30-Day Retirement Plan” could have turned $500 into $15.1 million or more — in less than 30 days! It’s happened before. Could it start again next week? Start your own “30-Day Retirement” — click here to learn how. Greed: Every single trader is in the market to make money. If you’re not, then I’m afraid you’re in the wrong place. But there’s a distinct line between wanting to succeed at trading — enjoying repeatable profits as the reward for your success — and being greedy. Greed causes overtrading, and overtrading kills profits. Instead of patiently waiting for ideal setups, greedy traders will jump on any stock that’s moving. The result is usually the same every time: a ton of commissions destroying what little profit was made. The key takeaway here is to only trade the best patterns or setups. You don’t always need to be buying stock just for the sake of having shares. If it helps to limit yourself to a certain number of trades per week, you should add a caveat to your trading rulebook. Hope: While it may sound innocent enough, hope can be the great profit-killer for traders and investors alike. Hope is a dangerous emotion because it can cause irrational thinking. Hope is the reason some traders add to losing positions — because they are convinced they are correct and hope the market will eventually vindicate them. Unfortunately, the market does not operate under these rules. When you’re trading a stock based on technical analysis, the market is always right. Before every trade you make, you must make a pact with yourself to sell the stock if it fails to do what you anticipated. If hope sneaks into the picture, prepare yourself for larger losses. Fear: A healthy amount of fear can be a good thing for every trader to posses, mainly because it helps convince you to cut losses early. But fear is a tricky emotion that can cause traders to behave irrationally. We’ve all experienced the same feelings when a stock we weren’t watching at the moment stages a breakout move. When you finally notice the stock is up a significant amount, yet you can’t shake the feeling that it will move higher. In this case, fear has a powerful grip. Instead of fearing losses, you’re afraid of missing out on potential profits. This leads to chasing the breakout, and either severely limiting potential gains and wasting a trade. My solution to this problem is simple: If you like a stock that has already broken out, make it a rule that you cannot buy shares until you have waited at least one hour from the point when you wanted to buy. If the stock pulls back to an acceptable entry point (which shares are bound to do, especially during the middle of the day) feel free to buy shares. But if it continues to run, accept that you were too slow, and move on to your next target. With a self-imposed time limit, you will eliminate impulse trades that can wreck havoc on your monthly gains. Sincerely, Greg Guenthner Billionaires Use Code-Cracking Technology to Predict Stock Prices! There’s a big wealth-exploding secret Wall Street is hiding from you… A few firms, including the world’s largest brokerage house, are making a fortune with it. By one estimate, Wall Street is making $57 million profit every day with this secret. Now, you can use this strategy for your portfolio. Click here to learn how it could have already made you $99,100 richer… Conquer These Three Negative Trading Emotions is featured at Penny Sleuth. The Secret $200 Retirement Blueprint Investing in Penny Stocks What Is Technical Trading Follow the Penny Sleuth on Twitter, here. Become a Facebook Fan of The Penny Sleuth, here. The Penny Sleuth, a free e-letter, offers independent news and commentary on small cap stocks, options and high growth opportunities. We sent this e-mail to KNUMASSCN@gmail.com because you or someone using your e-mail address subscribed to this service. Are you having trouble receiving your Penny Sleuth? 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