Emotions can Kill You!

In Trading, I have come across many analysts and traders, who are always trying to predict where the markets are going. Someone caught the market bottom and made windfall gains. He cannot control his excitement. Why? Because he has been trying to catch this bottom while the markets were falling like crazy. Today's gain and excitement would ensure that he will forget about his losses, think that he can make money from the markets, and again risk his money on tomorrow's trade. That is how the market works. It never ceases to amuse me.

Another Trader, He predicted the fall very well Yesterday. His reaction was also similar. He thought that he had caught the market pulse. Today, when the markets were rising, he did not believe that it could, as his analysis pointed to more downsides. He refused to acknowledge that he could go wrong. After all, he was right yesterday, when he predicted the fall while all around him were thinking that the markets were going to up. He definitely is a better analyst than the other. He continues to hold on to his losing position, even adding to it trying to average, and the markets continue to rise.

This is one emotion that can kill you in the market. This emotion is that of Excitement. It can lead you to believe that you are next to God! Get rid of this emotion. Understand that in the market, it is not important How much you made today or tomorrow. What matters most is How Much You are Making Consistently and What You Have Done to your Bank Account. You do not need to Predict the market to make money. It is your Actions which should be Predictable. You have to be Consistent in Executing your Plans. With a trading plan, good execution and sound money management, you would start making money without the need for Predicting the market. Believe me, No one has, and Will be able to predict accurately over a long period of time. A 50% prediction ability is Normal according to the laws of Probability. Then why get excited over it? Everyone will be right sometime or the other.