I expect the S&P 500 index to trade between the recent high and low for a while, several weeks o...
In Trading, Expectation Can Be a Dangerous Word
01/20/2017 3:19 pm EST
If a trader expects to win all the time-or even the large majority of the time-he's setting himself up for a lot of heartache, so Frank Kollar of Fibtimer.com suggests several important things for newbies to remember, such as the fact that trading is the war they are trying to win, not the current battle.
Why do most traders lose most of the time?
Why is it so many investors will stay with a position as it loses, hoping it will bounce back, instead of cutting their losses? And why do those same investors, when they have a winning position, take quick profits instead of letting the trend play out?
It is all about emotions. Not wanting to lose. Wanting to feel good about a profitable position. But unable to make consistent profits.
It's Not the Battle, It's the War
Too many market timers believe their last trade is a reflection of just how good a timer they are (or how good their timing service is).
This boils down to one word.expectation.
If you expect to win all the time-or even the large majority of the time-you're setting yourself up for a lot of heartache.
And the sad fact is, if you believe market timing is about winning all the time, you are also setting yourself up to be one of those many thousands of losing investors.
To win as a market timer, you must focus on the war, not the battle.
The fact of the matter is, this is to a large degree a game of odds and should be played over a long period of time. Those market timers who recognize this fact, and do not pull out during a losing position will be the winners in the end.
Market timing is about beating the markets and all those other thousands of losing investors, over time. It is about following a timing strategy through thick and thin and profiting over time.
We write about this frequently because we are just as human as our subscribers. We know the emotions. We know the pressures. If we can make all of our subscribers recognize that sticking to the strategy over time is the key to success, we will have accomplished a great deal.
The Worry Factor
All humans worry. If we didn't worry, we might take dangerous risks and pay a steep price.
Worrying is normal in our lives and has an important function.
However, worrying becomes a problem when you do it too often and for no good reason. For example, if your last timing trade was a loss, and you worry about it, you tend to think the same thoughts over and over again. It doesn't help much and you are likely to let it interfere with your ability to execute the next timing signal.
Excessive worrying can be a problem for successful market timing.
If you are the kind of person who worries all the time, it may interfere with your ability to pay attention to executing your market timing strategy.
The solution? Think long-term. Remember, it is the war you are trying to win, not the current battle. To read the entire article click here.
By Frank Kollar, Editor, Fibtimer.com
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