redbacka's - the last shorts - tuesday, page-2

BD - Applying reverse phsycology to yourself on trades gets very interesting I find, the issue being is that the market (or perhaps you) seems to be aware of it, and then doubles up again to make you wrong.

Take the following for example

1) You feel like you should buy
2) Applying the reverse psychology trick, you dont buy and sit on the sidelines
3) The market goes up
4) Thinking reverse psycology has failed, you second guess that and buy
5) The market goes down after buying in at an even higher point

I have had this happen to me on the way up sometimes, and it seems like you did something similar on the way down. It seems that no matter how many reversals of psychology are used you can still end up in this trap.

I think this is a big part of why people just try to build quant or TA models to take the feel, emotion, and second guessing out of it all.

Of course they get suckered in sometimes too (waiting for confirmation, fundamentals or trading the news headlines), but then this is why its a hard game to play.

Its also why professional traders who I've worked with are all about the confidence. If youre thinking about what ifs and maybes and all of that then you arent in the right frame of mind to make the trade because you arent sure about it. You can be sure and be wrong. Thats ok occaisionally. Thats what money management is for. But being sure that youre right before you make the trade is critical.

You might do well to sit down and write out what you think will happen (based on some analysis) in a log exactly when the thought occurs to you. It would be interesting to reflect on it without the emotion of the dollars attached. If you base the log on an instrument you havent been interested in previously you will be better able to detatch from your XJO related pain and focus on the analysis.

If, after a while, you get it right more than half the time, maybe youre on to something worth trading.