Emotional Trading

February 15, 2016

Emotional traders abound in the stock market. News appears and stock and option volume bounces and the target ticker bounces or tanks.

I used to push alerters in previous chat rooms I’ve been in to give a holding period estimate when making ticker alerts. Almost no one would do it.

WHY?

Because to remove some emotion in trading a trader needs to set a goal going into a possible trade that will be able to trigger a greed line. So, two parts here: holding period and greed line. These two parts aid you in getting the f@!$ out!

Emotions:

• Optimism
• Excitement
• Thrill
• Euphoria
• Anxiety
• Denial
• Fear
• Desperation
• Panic
• Despondency
• Depression
• Hope
• Relief

ANY ticker could be held long-term, maybe forever until it’s halted or no longer exists. Just wait 5 years until company news of progress hits, those financials are audited, your favorite alerter tells you to invest, a big paid promoter steps in, etc. This could be a strategy in itself- put in minimal amounts into many tickers and wait for them to pop.

WHAT?

Think about it. Every day we are trying to gauge the exit of our trades.

“Is it time yet?”

“I’m up XX% I’m getting nervousness here.”

“Is it going to tank?”

EMOTIONS may be starting to own a trader when these thoughts enter the mind.

A third element comes into play and I call it “why the f@!$ did I enter the trade?” We hold after the pps starts tanking waiting for that reason of why we entered the trade. The dropping pps does not scare you. What scares you is when the reason you’re holding fails to happen. If the reverse is true for you then emotions are getting the best of you.

So, I try to preach doing fundamental analysis (FA) and technical analysis (TA). Get into a trade because TA says to and the FA isn’t too scary that you’re left holding the bag of poop when the reason you’re waiting for entering the trade fails to come.

Emotional trading is a hot commodity in penny land (also called the over-the-counter (OTC)). A ticker’s pps goes up because more traders are buying than selling. Alerts play on our emotions. We go searching for everything we’ve learned to go search for reasons not to get in a trade before we put out money and time in. Then we get in the trade without a strategy, or a half arse strategy of wait for the pps pop and sell.

+ Are there financials? What the beep do the financials show?

+ Are filings with the SEC or OTC current?

+ How’s the share structure (SS)? Have a billion shares just been authorized with an existing 10 million float?

+ Have there been PRs issued by the company telling shareholders what the beep is going on?

+ How great has news been? Is it vague or detailed with verifiable facts?

+ Are there promotions going on? Alerts that will make the life of you ticker’s pps much shorter for an uptrend.

+ What does the chart (technical analysis = TA) show?

— Is the pps in a new high before entry?

— Are the TA indicators showing overbought?

— Is the pps trading in the resistance zone?

— Is there a chart pattern of doom developing?

When we trade on emotions we are trading emotions instead of the target ticker. We are trusting others to do the work for us. If you don’t know how an alerter works then you’re at the mercy of the alerter’s strategy and your emotions. Don’t be surprised when you get a FAT LOSS.

Develop your strategy. I show you my strategy so you can get an idea of all the work I’ve put into reducing the risks of my penny stock trading. You don’t have to follow my strategy BUT you better know what it is if playing an alert I make.

Summary

Emotional trading is dangerous. We want to trade a ticker’s pps not our emotions. We want trades that reduce our risk of LOSS.

+ Make a strategy.

+ Test the strategy before losing your $$$. HowtheMarketWorks is one free resource where you can track live trades, holdings, and exit with an overall virtual portfolio value. There are many apps that do this also: StockWars and TradeHero come to mind.

+ Give every ticker you trade a holding period. Think of it as a deadline for that company to show you why you got in the trade. MRIB had huge promises of vodka sales in December 2013. Now in March 2014 the license is just materializing.

+ Set a greed line. A pps limit, a dollar value, or a percentage of gain that you want and think you can get. Sell when it happens or exceeds your greed line. Don’t look back. Celebrate with your loved ones your great success. I’m fricken serious here lol.

+ Know why you’re entering a trade. If that reason is a rumor then prepared to get suckered. Rumors are an alerters best friend to have you trade your emotions.

+ Make sure there is enough volume now and estimation in the future for you to exit your trade 100% without being at the mercy of the Bidders. I’ve lost many gains due to this.

+ Watch promos closely. Promos are like a known disease to the ticker you’re trading pps. The alerter is a grim reaper who wants you to be blinded by your emotion of greed to get that quick gain, and you better know the alert’s strategy.

+ Learn how to read charts. There are many options and techniques for reading charts. Learn about all if them NOW. Pick some to start with and start testing the applications. See what TA works for you. Is it support and resistance? Fibocanni indicators analysis? Candlestick patterns? Chart patterns? Momo TA indicators (volume and pps trends)?