why i did not sell today!!!, page-2

One of the hardest lessons to learn for any trader/investor is how to acknowledge an error. For many when things don't go as expected, the initial reaction is to look for alternative reasons to justify an initial decision - There's new support from that trendline instead or that indicator failed but there's a new one giving support or we lost that contract but we may get that different one instead. Before we acknowledge fault, we always look for supporting alternatives to the initial action. Of course this is wrong, but regardless no one likes to acknowledge blame or fault. Often this realisation can take some time to unfold.

In psychology there is a common saying that the best predictor for future behaviour is past behaviour. There are many studies that support that phrase. If you have belief in a certain methodology, then right or wrong you are more likely to repeat the action. Breaking that cycle is extremely difficult, most due to most not being able to recognize fault, especially when alternatives exist. As any gambler or alcoholic will testify, ultimately it is their choice and responsibility. But try and argue that to someone who doesn't recognise the problem and they'll give you very good reasons as to why there is no error or problem. In their mind all perfectly reasonable.

Fault causes so much loss in financial markets, not because it exists but because so often we choose to mask it. Regardless of how you trade whether it be FA TA etc, the above holds true. In order to grow you have to be quick at identifying your mistakes and then dealing with them in a way that will minimise damage. I find this is much harder for the more experienced traders. New guys tend to expect to be wrong, which is good. The more experienced participants are far more reluctant to look for fault - this is why we have bulls and bears. If you're a bull or bear, you will at some stage fall into the trap of failing to recognise an error.

ww1