Hope and Fear, no Greed

As time goes by and I start considering myself a veteran trader rather than a newbie, at least wrt. the losses experienced and withstood and no longer left me shaking like a new born deer .. all this led to the dawning of the belief that I do have some insights into trading psychology that combined with the KickAss technical trading system(KATTS) will ensure that my firm TIOOG Advisors will be able to conservativly cough up the modest goal of 600% p.a. through circumspect trading.
As I say this I can visualize some market God reclining and saying "This guy is mine" while partaking the customary grapes. Ha.

.. but as I read and understood ,human nature is exact opposite of what is required in successful trading:

• When in a Losing Trade we Hope - most hold on to a losing trade in the "Hope" that it will recover some..the rational thing to do is exit it now for sure but limited loss.
• When in a Winning Trade we Fear -many a winning trade is exited too early for a small part of the total move because we fear losing the already made gains.

In the long term ,if you do manage to keep trading for long , these two traits are the only two reasons you are still there .. very unlikely you flouted even one of them for very long and are still in the game.Simply because these two habits bring the following to your trading :

• many small losses(live to fight another day) rather than a few large lossses usually ending with either end of trading career or worse.
  
• fully( or mostly) capitalising on the large moves you caught, without which your trading account will look quite anemic( owing to the regular small losses) if not finally DOA.

These two traits though not exactly rocket science need perspective,experience and balls ( maybe not in that order) to be practised .Though most experienced traders will unequivocally vouch for the soundness of the above theory and have clear understanding of the consequences of not following these tenets,they randomly ignore them to great pain.

So what is the difficulty? The issue is that any rational/reasonable person makes a simple choice of choosing :

• a definite gain now is better than potential for bigger gain.(fear of losing)
  
• a potential for a lesser loss is better than a definite loss now.(hope of recovering)
  

That's it , this is exact opposite of the above given gospel and explains why humans do not make good traders.Easier to preach than to practice..

"In theory there is no difference between theory and practice. In practice there is."(Yogi Berra).

The other point of note is that "Greed",the old suspect, is not at fault here, in fact the first situation of *not* wanting bigger gain is the exact opposite.
So, the culprits are just hope and fear and not greed.

..sheesh..enough said , what brought this blog about .. today was 2 trades,one winning and one losing .. winner reversed to loser..and loser became a winner after I cut losses at peak..
..as Finnian would say : "How now?"