The online trading game paradox

May 27, 2010

The obsession with keeping score suggests an interesting paradox: While the whole game of equity trading is focused on earning a solid return, limiting losses, and preserving capital, at the same time being too fixated on keeping score hampers our ability to treat trading more as the serious game that it is.

This is exacerbated by online trading program screens, where we may view an ongoing, real-time tally of our bottom line at any minute. Nice to have it when you want it¡ªbut also a built-in recipe for fixation.

An obsession with keeping score blocks finding ways to creatively ..Read more..

Online Trading Style – Optimist-Gullible

May 27, 2010

Optimist-gullible investors are pleasant people to be around. They basically see things positively and have a good attitude for managing the ups and downs of life, including the stock market and online trading. They view the glass as half full. They tend to be friendly, trusting of others, and light-hearted. This type likes to get along with others, avoids arguments, and sometimes yields his or her own interests for the preferences of others.

The optimist likes to smile a lot, enjoys socializing, and prefers the company of others rather than spending time alone. He or she has made a conscious or unconscious decision to accept the difficulties in life without spending undue time focusing on or worrying about them. Disappointments are taken in stride.

This type likes to work with other people and is a good ..Read more..

Online Trading Errors – Obsession with Keeping Score

May 21, 2010

One of the common errors made by beginning day traders, position traders, and long-term investors alike is spending an inordinate amount of time thinking about and tracking gains and losses before, during, and after trades. Because money is on the line, our decision making is overly conditioned by the fear and greed that accompany this score-keeping fixation.

While we obviously need to monitor our gains and losses, the ..Read more..

Online Trading Style – Doubter Timid

May 21, 2010

People with this trading style are skeptics and, often, worriers. Much of what others may take for granted they are not so sure about. They like to question what they hear and read and are not afraid to disagree with others. They like to have intellectual arguments with others, challenging their viewpoints.

Personality

They pride themselves on their critical thinking. Like obsessives, they aren’t afraid to go deeply into an area that captures their interest. They tend to be conservative in their politics, ..Read more..

How to reframe online trading into a game

May 12, 2010

Those who seem best able to reframe trading into more of a game to be won or lost, without getting so caught up in the fear or greed attached to money, come in a few different forms.

One group that appears to be successful at going beyond overconcern with actual dollar amounts are institutional money managers, trading large blocks of stock for mutual funds and other accounts. This group would include all those ..Read more..

The demand to act in online trading

May 7, 2010

Fear may be magnified when we’re watching a volatile market too closely and begin to spin off into fantasy. While day traders need to be disciplined to stay focused on the numbers when they are trading, the greater majority of online investors do not need to watch the tape from minute to minute. They simply aren’t doing enough trading to warrant this kind of close scrutiny.

Avoiding panic reactions means learning when it is not in our best interest to watch the tape too closely. And when it is best to turn off the sound of the TV and not be further whipped into a frenzy by analysts and commentators.

In psychology research studies, this pressure we feel to take action is referred to ..Read more..

Ego as friend – false pride as hindrance

May 7, 2010

Pride is the reasonable or justified sense of one’s own worth, based on the attainment of one’s values. But we also create a false image of ourselves, a grandiose image that we try to live up to, and false pride is what we feel when we try to live up to this false image. False pride is the tenuous feeling of worth based on fooling ourselves into believing we have attained our values. It is neither reasonable nor justified.

When our feeling of false pride is challenged, ..Read more..

Online Trading Style – Obsessive-Disciplined

April 21, 2010

To be obsessed is to have irresistible ideas or feelings or both. They need not be bothersome or unwanted. For our purposes, we’re not using this word in a clinical, negative way. I mean it to be a general label to indicate a certain way of thinking and behaving. Some like to refer to this type as your garden variety anal or anal-compulsive personality.

Personality

Obsessives are able to dig in and become very involved and focused when something grabs their interest. They pay close attention to detail very desirable trait to have when it comes to trading stocks. They like their life in order. Because they pay attention to detail, they sometimes overlook the big picture because the detail is more enthralling.

Their time is used efficiently, except when they procrastinate about ..Read more..

How are Questions of Risk Tolerance Relevant to Online Investing

April 21, 2010

We usually experience fear more powerfully than we do greed. Fear shakes our financial security and scares the hell out of us. At its most powerful, it even jars our sense of personal security in the world. Here’s an example.

In the movie, The Game, Michael Douglas plays a merger and acquisitions big shot. He gets caught in what becomes a very real game that tests his survival strength when his wealth, possessions, identity, and normal insulations from the everyday world are suddenly stripped away from him. He wakes up in a trash dumpster in Mexico, battered and disoriented, with no money.

He is forced to use his wits to get home to San Francisco when ..Read more..

Online Trading Hints – To be Truthful to Ourselves

April 13, 2010

We might tell ourselves or others we are ambitious rather than greedy. Or we might think of our desire to make a lot of money as fulfilling our security needs. We may feel excited as we’re making increasing amounts of money. Why ruin our excitement by labeling it greed? Can’t we just say we have a healthy interest in earning as much in income and investments as possible? Sure, we can label it anything we like.

But for our purposes of balancing fear and greed and understanding how these motives affect our trading behavior, we must be ruthlessly truthful with ourselves. We want to understand how ..Read more..

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