Heres a good read that I just read..
Your Emotions Are Your Enemy, So Get Over Yourself
You have to be able to control yourself. You can't let emotions get in the way of your thoughts and actions...Warren Buffett
One of the most difficult aspects of trading in today's market is handling your emotions. For many months, we have struggled through a market and an economy that seem intent on remaining an emotional yo-yo. To say "don't get emotional" is pointless. Everyone is emotional about money. Money is the last great taboo and it associated with a myriad of emotions.
So what can you do about your emotions as they apply to trading and investing? Of all the books and papers I have read or written on Trading Psychology, there is one aspect that stands out most clearly to me. That is the challenge of living in the past, and I believe that this is one of the most significant obstacles to trading success.
Why? Because the brain remembers. The brain imprints ( through neuronal circuitry) loss or gain on the temporal lobe memory area ( see simplified diagram of the brain), and generates fear or greed as a result of it. The larger the loss or the gain, the greater the neuronal imprint becomes. Large losses are manifest as fear and large gains are manifest as greed. Both are equally destructive to further success with trading.
The real culprit is long term memory. It is the memories of the large losses or large wins which stay with the unsuccessful trader and cause continual sabotage and inability to move forward.
The best traders forget about a loss the minute they take it and move on. They are confident in their system and their ability to execute it. It is not about the money for these people. It is about finding a system that will bring them more profits than losses. The best traders know how to take losses and not become depressed, angry, jealous, disgusted or defeated. They know how to take gains without gloating, boasting, cha-chinging ( and you all know how I feel about that word) or becoming outrageously happy. They only see the trade they are about to enter---not the trade that just ended. All past trades are out of sight and out of mind.
NEXT!!
MOVE ON!
If you cannot do this, you will fail because fear and greed will lead you down the wrong path
So what do fear and greed have to do with forgetting about the past?
Fear doesn't form in a vacuum. It is a learned response to a particular event or probability. In the case of trading, when you have a trade that goes bad, the regret and frustration can carry over into the NEXT trade. Or worse, the fear is so consuming, that you don't enter your next trade. Of course, Murphy's Law dictates that the trade you don't enter is the one you should have entered, which only compounds greed (and frustration). This particular problem is fueled by the expectation that every trade you enter should be profitable. If you truly believe that, then here is an important piece of information for you - not every trade will be profitable!
Theres sometimes a fine line between goals & greed...
