TRADING PSYCHOLOGY
Anxiety Cure
by Ruth Barrons Roosevelt
Here are some tips on not letting those feelings of anxiety affect your trading.
"Hope is not a strategy; it's a simple emotion," a retired army general remarked. He was talking about a war, but his comment reminded me of trading. I remembered trading situations when hope was the only strategy I had.
That could be said about almost any emotion and trading. Greed is not a strategy; it's a simple emotion. Fear is not a strategy; it's a simple emotion. Sometimes, unfortunately, fear, or greed, or hope, or determination does become a trader's basic strategy. Trading becomes dictated by emotion rather than a consistent strategy for entering and exiting the market. The general was right; simple emotions are not an effective strategy. A strategy built on emotions will be inconsistent at best and disastrous at worst.
An emotion is a response to a thought that expresses itself in the body. That is why we call them feelings. We feel the emotion in our bodies. An emotion responds to a thought, and soon, that emotion affects other thoughts as well as actions, which in turn express themselves in more feelings. We build a continuous cycle between thought, emotion, and action.
Most traders say they don't want to experience any emotion. They want to respond to signals and situations like a computer or a machine. But traders aren't isolated machines unconnected to a feeling body; they're humans. Mind and body interact; they correspond and interact.
If you want to respond as a computer, you can set up your trading to be completely computerized. You can even have the computer place the orders electronically. This takes you completely out of the loop. You can do it -- but you won't have human input on visual patterns or current events. Computers are simply a combination of on-off switches and don't begin to have the endless complexity of the human mind. If the human mind is hopelessly and emotionally conflicted, however, the computer is a good idea. If a person is emotionally entangled, he or she probably will not be able to leave the computer alone to run the program without his or her intervention and monitoring.
Ruth Barrons Roosevelt is a psychological trading coach, working with traders around the world. She can be reached at her Wall Street office, 165 William St., New York, NY 10038, 800 692-0080 or on the Web at https://www.RuthRoosevelt.com.
Excerpted from an article originally published in the September 1999 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 1999, Technical Analysis, Inc.
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