TRADING PSYCHOLOGY
Should I Trade Today?
by Adrienne Laris ToghraieIf you're not at your best when you're trading the markets, you're putting yourself at a disadvantage. Make sure you're up to the challenge.
Should I trade today? If you answered this question honestly every day and traded only on your peak performance days, your annual gross income would probably exceed anything you have ever produced. This is, of course, assuming that you have and are following a good trading plan. The chances are that most of you do not want to ask this question of yourself because you will trade regardless of the answer.
The objective of this question and answer is to minimize your risk and maximize your potential for taking successful action. The way to accomplish this is to follow your trading system faithfully, which should require that you trade only when you are in a peak state of physical and emotional readiness.SELF-DECEPTION
Neil lies to himself about his ability to trade on days that he should be benching himself. During those trading sessions, he often incurs significant losses that require him to recover lost trading momentum and capital.
He wants to know why he persists in trading on those days when he should know better. Since he's not the only trader who's ever traded during periods of self-deception, it is important to understand why this happens and what a trader can do to prevent it.
BAD TRADING DAYS
Let's face it, we all have good days and bad days. But traders are not like stage actors who have to perform despite high fevers, sprained ankles, or broken hearts. While an actor's career depends on his showing up and giving his best performance for a paying audience every day, a trader cannot simply rely on memory and rehearsal to make it through those days when he feels less than optimum. Because the play of the market changes from moment to moment, the trader cannot coast. A trader feeling less than optimum can suffer a crippling loss with long-term consequences in a single instant of miscalculation, emotional weakness, or lack of focus. These lapses are most likely to occur when you are not feeling your best.
At the very least, there will be days when you simply did not get enough sleep, missed taking your allergy medicine, or are coming down with a cold. While these conditions are physical and relatively moderate, they will have a definite and measurable effect on your ability to think and take action: your mind is not as quick, your perceptions are dulled, your reaction time is longer, and your decisions are not first-rate.
Adrienne Laris Toghraie is founder and head of both Trading on Target and Enriching Life Seminars. She may be reached at Trading on Target, 100 Lavewood Lane, Cary, NC 27511, 919 851-8288, fax 919 851-9979.Excerpted from an article originally published in the May 2000 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2000, Technical Analysis, Inc.
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