Investors are humans, too – which means emotions can influence one’s trade decisions. Maintaining discipline is key in helping you to avoid making those emotionally driven mistakes.
When we embark on the road to trading, we’re usually determined to learn as much as we can about, for example, technical analysis, the practical things about how markets work, and ways that we can ‘predict’ what price is going to do. It is the same for most people – it was the same for me.
It takes us some time to truly understand that we cannot predict the future – no matter how much analysis we do. We tend to look for a strategy that gives us a logical and statistical edge. We might even build our own strategy and use historical data to back-test it. But whenever we trade that strategy in accordance with our set of rules, we still seem to keep losing.We then seek out other, better strategies. This is a dangerous trap. Because while the knowledge quest is a good thing and should be never-ending, it takes us a long time to realise that the problem isn’t with the strategy. Rather it’s that we’re sabotaging ourselves.
As humans, we have two primary drivers: fear and greed. Think about it: Every single emotion that we as humans feel can be traced back to one of these two primary emotions. We love, ultimately, because we want to feel fulfilled. (Sometimes we marry the wrong people because we are afraid of being alone.)
Esta historia es de la edición 15 August 2019 de Finweek English.
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Esta historia es de la edición 15 August 2019 de Finweek English.
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