Let me tell you about a classic psychological study that I found online and has important insight for us as traders and investors. In the early 1980s, two psychologists Amos Tversky and Thomas Gilovich began sifting through years of statistics from the Philadelphia 76ers – a US basketball team. (Amos Tversky is well known for…

For many traders and investors, particularly those new to the world of trading, fear is the most difficult emotion to overcome and control. Fear can manifest itself in any number of ways including, but not limited to, fear of being wrong, fear of not being right, fear of facing another losing trade, fear of losing…

For the untrained mind, there is no harder promise to keep than the promise we make with ourselves. It is easy to rationalise with ourselves as to why a promise we made is no longer valid and/or that we should forget about it altogether because it doesn’t really matter as it was only something we…

Trading and investing using a methodology or system that outperforms the market over the long term is a wonderful feeling and one that contributes greatly to the elimination of fear. Knowing that you have an edge over the market and that probability is on your side allows you to focus on the trading process rather…

Financial markets have ups and downs, sometimes extreme, which cause market participants to experience emotional roller coaster rides in line with the market’s price swings. In recent years, as information that affects financial market prices has become rapidly and readily available, the volatility of the ups and downs has increased, along with the emotional swings…

If you are investing according to a consistent method then all trades are potentially “good” trades. Don’t fret about which one is the best of the “good” trades or which one will be a loss trade. Just do the trade according to the rules of the methodology! The rules are your edge in the market…

The reason that you need a Trading Methodology or strategy when investing in the market is to protect you from yourself. You need rules to determine when you should buy, hold, sell and how much capital to commit to a trade. If you don’t believe that human beings need rules to protect themselves then explain…

Active investing is very different from passive investing and hence requires a different mindset for decision-making. Indeed, active investing requires a completely different mindset to any other kind of buying and selling that you have done in the past, e.g. household appliances, motor cars, clothes, etc. All your life you have probably been taught to…

Losing streaks and flat periods are a reality of trading. Just as sports teams have losing streaks, so do traders. A trader may take many trades and face loss after loss before scoring a win. Trading requires persistence in the face of seemingly constant setbacks. It takes a rare person to be able to pick…

Carrying on from last week’s journal post “Who’s to blame?”, I will now discuss shifting our thought process to make change. To improve your responses you can do one of two things: Change your perception of the outcome to see it as positive or at least as not causing pain. Change the process to make…