Many traders are not undone in their trading by their method or system. Problems arise when the adrenaline starts pumping and their heart starts pounding and then bad decisions are made. Pride, Fear, Greed, and Hope are some of the most dangerous internal indicators you will ever have to trade against.
Pride screams at you: “Don’t stop your loss! Prove you are right! It will come back, just wait.”
Fear advises: “Go ahead and take your profit quickly we can’t let our winners run, let’s take the small profit now because the profit could reverse and we end up with a loss.”
Greed is confident and says “This trade can’t miss, I am sure it will be a huge winner, bet your whole account! We will be rich!”
Hope stands alone with no trading plan and half halfheartedly says: ” I am not sure what a good entry is here so I am just going to buy this stock and hope it goes up.
Below are some great videos about these emotions by Scott O’Neil. He is President of MarketSmith Incorporated, a stock research tool developed by a team of investment professionals at William O’Neil + Company, a Registered Investment Advisor for Institutional Money Managers providing equity market buy/sell recommendations and independent research. Scott is also a portfolio manager with O’Neil Data Systems, Inc. -Forbes