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.
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.
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!
All the best
For those who missed earlier post, check out the top 5 bad habits…