| The Penny Sleuth Features: Penny Stocks, Options and High-Growth Opportunities! |  |      | Weekend Sleuth: Keeping Emotions Out of Trading
By Jonas Elmerraji
February 5, 2011
Dear Penny Sleuther,
As humans, our emotions define us — they’re foundation for our relationships, our choices, even our personalities… But as a trader, they’re a huge handicap.
That’s because while emotions help us interpret the world around us, they can also temper our outlook on the markets in ways that aren’t always accurate. It’s no surprise then that even professional traders feel infallible after a winning streak, and they feel like fools after a few consecutive losers.
Letting your recent trades dictate your mood is a huge mistake. That’s because allowing those emotions (either good or bad) to enter your mind will ultimately impact your future trading in a negative way.
Remember, each trade is independent of the last — but all too many traders and investors ditch their trading plans and tack on risk to make up for losses or extend gains.
Case in point: For subscribers of my premium penny stock advisory, Penny Momentum Trader, 2011 has gone off to a strong start — even though it’s only the first week of February, we’ve already closed out 5 positions for double-digit gains this year. With that string of successes, it’d be easy to throw caution to the wind and feel infallible. But those egocentric emotions are every bit as dangerous as trading in a rut.
That’s why we’re continuing to approach each trade exactly like the last — the system hasn’t changed; in the long-term, neither should our average gain.
Ultimately, taking emotions out of investing is tough, particularly if you’re new to the markets and don’t have the perspective (or track record) of a veteran. That perspective won’t come overnight, but by tackling emotions in your trading head-on, you can significantly cut unnecessary risks from your portfolio.
Above all else, stick to your trading plan, and keep emotions out of the game.
Using the “Fear Index” and Speculation to Profit
This week the Penny Sleuth featured ways to profit using speculation, the fear index… and a whole lot more. Here’s a recap of this week’s investment insights…
Comment or question about an article? Just click on any article’s title above and join the conversation by leaving a comment...
We’ll be back on next week with more thrilling insights on the on today’s market climate…
Until then, please send me any editorial comments or suggestions at editor@pennysleuth.com.
Have a good weekend,
Jonas Elmerraji
Managing Editor, Penny Sleuth
P.S.: “…$1,900 minus a $14 [broker] commission equals a very nice profit,” opined a Penny Momentum Trader reader last week, in reference to the latest sell recommendation I sent out. Not bad for a week’s work!
Hearing about reader gains like that is one of the coolest parts of my job — and I want the next one to come from you. That’s why I’m offering a 60-day risk free trial of Penny Momentum Trader to any Sleuth readers who want to get in on the action. Click here to learn more — or here to sign-up right away.
Hurry… My next alert hits subscribers’ inboxes at 11:30 a.m. tomorrow!
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