Seven Bad Habits of a Trader: Trading Habit #6 – Hesitation

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Trading Habit #6 – Hesitation

Happy Makara Sakranti to all fellow traders, May this harvest season bring you prosperity & positivity

You are watching a stock that has all the signals you look for in an opportunity. The proper point to enter comes, but you wait. You second guess the opportunity and don’t buy the stock. Or, you bid for the stock at a price that is not likely to get filled if the opportunity does pan out the way you anticipate it will. As a result, you get left behind while the market pushes the stock higher.

A short while after the initial entry signal, when the stock has made a decent gain, you decide to finally enter the trade. After all, the market has proven your analysis correct, so you must be smart, and right! Not long after you enter, the stock turns south and you end up with a losing trade. If only you had bought when you first thought about it.

How often you do it?..I mean hesitate?..You just can’t pull the trigger. This becomes even more difficult especially after a string of losses. I believe this is mainly to do with traders memory where you remember your losses intensely and your wins lightly.

This traders memory becomes an obstacle and many a time you miss great trading opportunities.This is why often experience traders say that just follow the system, Don’t over-analyse. But even after we design a system we often struggle to pull the trigger.

The Solution

This is really just a confidence issue. You are either not confident in your ability to analyze stocks, or you are not confident in the methodology that you are using to pick trades. Therefore, you have to research your method so that you have the confidence that it works. Then, you have to start small, making trades that have a potential loss that you are comfortable with. As you gain confidence in your method and your ability, increase the trade size. With your new found confidence, stand in a crowded room and scream, “I am great!” Well, maybe don’t carry it that far. :grinning:

There is one of the technique often recommended to me by old traders. They call it visualizing technique. Before you start your trading day, they encourage you to go over your rules and reaffirm the beliefs that you are going to trade when the right opportunity meets all your rules. Allow yourself to be gently reminded of the fact that by following system you are removing emotions at play and increase your chances of success.

I wish you best and have a great week ahead! :grinning::v::raised_hands::pray:

All the best
Suresh

For those who missed earlier post, check out the top 5 bad habits…

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Mark Douglas says, “Do your duty, without thinking of the outcome as it’s random” (loosely put together the whole book Trading in the zone)

Only when we do our part of pulling the trigger without the hesitation, we come to know of the outcome!

Very well elaborated @SureshG :+1:

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Thanks @saiography :pray:

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As peter brandt said in his interviews and tweets, pisition sizing and pulling the trigger becomes a challenge after traders go past the initial hick-ups such as fine tuning set ups and strategy.

One more reason for hesitation that i have read about and also have experienced is actually what happened to our trades for past couple of time. If we have lost on particular stock or index, then our mental biases such as negativity bias kicks in. This makes it difficult to pull trigger.

Thanks @SureshG for such insightful writing. Eagerly waiting to know what cud b the final bad habit.

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Thanks @TraderVenk …I agree about mental biases… It is interesting to know when traders do revenge trading then they pull the trigger quickly because they are overwhelmed by the emotion to extract the loss back from Market…Similarly when you trade out of boredom one tends to trade without hesitation…It is regular, clean set-up, high probability trades where we struggle…:thinking:…Have a great weekend!..:pray:

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