Trading Survival

Greed, Fear and Hope

According to evolutionary psychology, people today still seek those traits that made survival possible then

Emotions Before Reason:

In an uncertain world, those who survived always had their emotional radar — call it instinct — turned on. The reliance on instinct undoubtedly save lives, allowing those who possessed keen instincts to reproduce. So for human beings, no less than for any other animal, emotions are the first screen to all information received.

Today people are often trained to dispense with emotions in favor of rational analysis. But evolutionary psychology suggests that emotions can never fully be suppressed.

Confidence Before Realism

In the unpredictable and often terrifying conditions, those who survived surely were those who believed they would survive. In addition, people who appeared self-confident were more attractive as mates—they looked as if they were hardy enough to survive and prosper. Thus, people who radiated confidence were those who ended up with the best chances of passing on their genes.

Those amazing animal traits help you prosper, and best chances of passing on your genes. In trading, those will destroy your trading accounts. If you want to prosper in trading,

Traders must control their emotions

Livermore’s views on hope greed and fear lie at the heart of successful trading. He describes how traders fail when they allow hope of recovery to prevent them cutting their losses and fear of losing a small profit to make them sell prematurely, when more profit would have been available if only they had the nerve to stick with the trend.

You must establish and focus on your trading plan.

  • Decide which financial instruments you will trade
    Determine which stocks, currencies or other financial instruments to trade
    Identify your market indicators
    Decide ahead of time how many shares or lots you will purchase
    Set specific price entry points
    Write down the process of how you will monitor each trade
    Decide on the parameters for trade exits
    trading times
    Evaluate your trading plan
  • Rookie traders never go against the trend. Trading with the trend gives you a high probability of winning.

If you consistently follow your rules without breaking them, you could suppress your emotions in trading.

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