It's pudding time, children

Why hello! I didn't even see you there!

Today I want to talk about feelings.

Well, not really, but sort of. Sort of not really.

Actually since this ‘blog’ is based on the wonderful topic of trading, today we're going to talk about traders and their emotions.
Seriously though, most new traders underestimate or more likely don't estimate at all, the importance of developing the right trading psychology and emotion management. I want to provide a short list of some of the best ways to achieve this.
Number one (by far): Position sizing!!!!!!

Question: Have you ever heard of people who completely lost all the money to the market? I have. Even though the circumstances are always different, there's one thing each of those people had in common. They didn't position size properly. Improper position sizing is such a rookie mistake and it's easy to make that mistake and it's very destructive.

What do I mean by position sizing? A position size is the size of your position, or how much money you put into any one trade. If you have a 10,000 dollar account and you have 10,000 dollars in the market, and even worse, 10,000 dollars in one stock, you're guaranteed to make bad decisions. You’ll get out of trades too early because you fear losing more money or you’ll stay in them too late because you want to make your money back. Improper position sizing causes traders to trader with fear of uncertainty as opposed to merely the risk of uncertainty .

The second trick: Trading successfully is all about having a written plan. A trading plan is something very personal to each trader. I wouldn't be able to merely copy the plan of a trader with a million dollar account and replicate his/her results. That is because each person needs to trade differently based on his or her personality. For example, there are traders who use option strategies that are very low maintenance and are basically like watching paint dry. There are traders who like to spend each day riding the ups and downs. It's important for a trader to understand their personality, create personalized rules for themselves, and create a written plan. A written plan also doesn't do much good unless its owner sticks to it. Discipline, maybe you've heard of it?

The third little thingy : Success can actually be a pitfall. Remember when I said that it's important to manage emotions? We as traders can easily become overconfident. I recently played blackjack on my phone for some reason, and I turned 500 dollars into 1300. I was ‘position sizing’ rather aggressively at about 100 dollars a hand. Once I hit the 1300 dollar mark, I decided to increase my bets to 200 dollars a hand. That’s the perfect example of the type of overconfidence and irrational exuberance that can come from success. I actually lost most of my money at that point, and while it was just a stupid game and I wasn’t taking it seriously, it was a good lesson and reminder to me. On a side note, I would much rather be a blackjack dealer than a black jack player, they have better odds.

In summary, the second you get careless is the second a big target appears on your back and the market doesn’t take any prisoners.

I learned a trick to combat this feeling of 'I'm-so-good-at-this-look-at-me-also-check -out-my-pants-I-got-them-on-sale'. The trick is wire money out of the trading account regularly. The purpose of this is to trick your brain into thinking that you're still an underdog and you still have to be careful. Take that, stupid brain!

Fourth thingy thang: We have to keep the big picture in mind and to never get hung up on one trade. In other words, we have to be able to take a loss and admit we're wrong. It's important to keep a trading journal, that's one of those basics that any educated trader knows, but I have learned to break up my trades into blocks of 25 and so that every trade I do is just part of a bundle of trades and it helps keep the big picture in mind. I don't want to blow all my winnings on one trade because I got emotional. This is just another tool to curb emotion and see things with objectivity.

As you can see this business is difficult requires a great deal of discipline. When I become an established trader I won't teach anyone how to trade unless I think they're hungry for it and won't ever give up.

That's all I got, maybe someday I'll write a blog that's actually interesting!

Just kidding, I probably won't.