Do not succumb to regret

When trading the markets losses are commonplace. They cause us pain, but for some traders bitterness from the wrong decision is the worst feeling of all. They blame themselves for having done something wrong. They bring himself so that trying to abandon transactions, not to feel regret afterwards. In the book «For the threshold of greed and fear,» Dr. Hersh Shefrin argues that regret and responsibility are closely linked. The more we accept responsibility for their actions, the more powerful then a feeling of regret.

Dr. Shefrin examines in his book, the status of three transactions, which concluded traders George, John and Paul. For each of these traders is characterized by its level of acceptance of responsibility and therefore regrets. So, George, analyzed the situation on the market, decided to sell his stock portfolio and buy certificates of deposit. John, also sold shares and bought certificates of deposit, but based on the recommendation of its financial advisor. Paul has always invested in certificates of deposit, and continues to do so. All three of the trader bought the certificates for three different reasons: one, relying on our own analysis, the other on the advice of a consultant, third, because this is his usual tactics. What each of them thinking about their investments? What if the market situation is unfavorable, and that it would be better to invest in shares. How do you think those who feel the worst? According Shefrinu, it depends on who feels most responsible for their actions. In this case, George inclined to feel the greatest sorrow. John will probably be more angry at his adviser, than upset, and as Paul, it will be quite indifferent, because he does not invest in stocks.

Does the regret of trading decisions? Yes, some traders are amenable to its influence. The best way to avoid this — just stop trading on the market. But there are less drastic ways to protect themselves from this feeling. You can consult with others, and then secretly accuse them that they gave bad advice. You can stick to its normal trading style and try to avoid playing on chance. You can set limits in their trading style, which will relieve you from the feeling of regret. It is worth remembering that you should not allow the unfortunate effect on your trading decisions. It is important to know what impact it can have on your trade.

Are all traders are amenable to this influence? Although nearly all tend to feel regret after a wrong investment decision, the former solely your mistake, studies show that some people experience more regret than most others. For example, a study in pessimism and optimism proved that people who tend to frustration and pessimism often think that the unpleasant events in their lives caused by their own mistakes and reflect the constant characteristics of their personality. They are angry at themselves. Subconsciously, they think: «I have no talent to trade. I make the wrong decisions, I am incompetent. This tendency to ensure that blame themselves, creates the preconditions for the propensity to upsets. If you are a man who blames himself for failures, then you have a predisposition to the chagrin, and she could have a negative impact on your business opportunities. It is important to recognize that a problem exists and use some of the psychological strategies that will help you overcome this tendency. We will talk about some of them next week.

Автор: Трейдер

Личный блог профессионального трейдера на фондовой бирже США (NYSE, NASDAQ, AMEX ) Дмитрия Гаврилова. Начал свою карьеру на NYSE (Нью-Йоркская фондовая биржа) в 2008 года в проп компании . С 2009 года стал старшим трейдером крупнейшего пропа в России и начал обучать трейдеров компании. С 2011 года был трейдеров компании GT Capital Group при поддержке SMB Capital (США).