Humility's Role in Trading Success
Winning big feels great. In fact, isn't that the entire reason why you wanted to get into day trading to begin with? You figured that winning big, which is both a financial and emotional award, was the pinnacle of your success. We certainly don't engage in day trading to lose big on a regular basis. Your first big profit will probably be celebrated with a toast and perhaps even a private family celebration. This is fairly common and completely natural to celebrate the hard work, dedication, and the eventual pay off that can follow.
When you experience winning, especially when you start to experience a string of strong profits or you experience a very large profit, the emotional reaction can be just as defeating as a negative emotional reaction to large losses. If losing money is just educational feedback, then would it not stand to reason that large profits are the very same? I am not discouraging you from celebrating your achievement. I also encourage you to celebrate your losses as a fantastic education. When we feel as though our profit is the only cause for celebration, we also tend to allow that emotional high to get in the way of making strong and healthy decisions.
Let's say you experience your first seven day profit streak. On day eight, notice how you're feeling. Have you found a higher level of self confidence? Do you feel like you're really on top of your game? Are you experiencing a feeling of being totally kissed by Lady Luck and that you can push your personal envelope just a little further than usual?
These feelings have the potential to lead to careless investing. When you are too emotionally low you are bound to make serious mistakes based solely on your emotional presence. The same applies to emotional highs. When you are emotionally high, there is usually an element of self belief that borders on a feeling of invincibility. Of course, believing, even just a little bit in the very back of your conscious mind, that you are invincible will inevitably lead to a serious loss.
Tailoring our negative emotions is something that we are all told to do from a young age. Tailoring our positive emotions is something that might seem really foreign to some of us. It isn't that the emotion is a bad thing. It is how we allow the emotion to affect our ability to make clear and informed decisions. When we trade emotionally, we are setting ourselves up for loss. In many cases, humility is the key to having our emotions but trading with a clear and rational head. Humility helps us to hang on to the understanding that in the trading world, there are profits, there are losses, and there are break evens. And each one is absolutely going to happen to you many times over.
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