Often we are told to deal with our emotions so they don’t
affect our trading process. We also know that fear and greed are the most notable
emotions which traders have to deal with on a consistent basis. Although both
these emotions form part of our overall state of mind, we seldom put our finger
on the pulse of the minor emotions which serves as a catalyst to us feeling
generally fearful or greedy.
Today’s article deals with a focus on doubt which is the
secondary emotion to fear. Doubt can be
defined as an uncertainty revolving around in your mind which grows when there
is a difference between a perceived outcome of an event and the realities of
the present. What this often leads to is a gap in our minds between what we
expect and what really is. This gap
which is left behind needs to be filled with some sort of emotion and more
often than not we find negative emotions creeping in and seemingly brings us to
be fearful.
In my last article I mentioned how doubt
had the potential to unfold our trading plan. Traders become susceptible to
doubt because trading in the short term requires a continual revision of their
stance. As humans we are prone to allowing ourselves to form habits so that
when we repeat an activity we expect to receive the same result each time. So
what we do is become accustomed to the current market environment and flow
along, expecting it to behave that way all the time. We think like this because
we start believing that we have found a degree of consistency in our trading.
But the problems set in when the market environment begins
to change. The edge we were once so confident of starts returning negative
outcomes on more regular occasions. This is when doubt starts to set in our
minds and begins to question our judgement. We begin to battle with ourselves
whether the decision we made was right or wrong. This can be agonizing for a
trader, until finally we succumb to fear of what happens next.
Truth be told we don’t really know what will happen next,
which takes me to the next point. Doubt creates in our mind a mechanism whereby
we find the need to rationalize why a certain event took place. Once we start
looking for an answer, which in trading can be unlimited in possibilities, we
begin to start processing information which is unnecessary. Information
overload drives our mind into a state of confusion. Once we enter this stage
the learning process has effectively been side lined as we are unsure of what
the market is really telling us.
We can observe from the scenario above that doubt has the
ability to create so many more emotions than its own, particularly emotions
which are most unwanted. How do we deal with this?
There’s 2 ways in which you can deal with this problem,
either you choose to concede to the power of your emotions and allow them to
continue their destructive path of eroding your precious capital or you can
make it your goal to learn about your emotional responses to situations that
happen, jotting down notes, compiling research and studying ways to deal with
these emotions.
You are going to encounter doubt throughout your trading
journey, not only when you trading but also in your beliefs of turning it into
a profitable business, this is inevitable. However your success does not depend
on how brave you are or how much money you going to make but rather it’s based
on your commitment to enduring the bad times as much as it is revelling in the
good times because it’s in the bad times where you learn the most crucial and
hardest aspects of trading and ultimately define you into the trader you want
to be.
If you would like to contact me you can through my email at cadetrader@gmail.com or if you wish to
follow me on twitter and get the latest updates of news, interesting commentary
and general trends in the market, my twitter handle is @CadeTradeR if you
follow this link it’ll take you directly to my twitter timeline: https://twitter.com/CadeTradeR
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