Investing 101: The 4 Most Common Psychological Traps - News and Current Events | futures io social day trading
futures io futures trading


Investing 101: The 4 Most Common Psychological Traps
Updated: Views / Replies:429 / 1
Created: by kbit Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 
Thread Tools Search this Thread
 

Investing 101: The 4 Most Common Psychological Traps

  #1 (permalink)
Elite Member
Aurora, Il USA
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: futures
 
kbit's Avatar
 
Posts: 5,872 since Nov 2010
Thanks: 3,301 given, 3,332 received

Investing 101: The 4 Most Common Psychological Traps

It's been said of life thatwe are our own worst enemies, for the mindless decisions we make, as well as our frequent inability to learn from them. Nowhere is this more evident than on Wall Street, where this enemy from within has a way of making us too confident, too timid, too impulsive, and too staid - sometimes even all at once.

And so, for this installment of Investing 101, we highlight four key areas where your head can be the biggest obstacle to success as we tacklesome dos and don'ts of market psychology.

Anchored in the Past
Oh how easy it is to pick winners with the benefit of hindsight. And yet, one of the biggest blunders investors make is the tendency to make decisions in the rear-view mirror instead of the through the windshield.

"There's always some big recent event that everyone anchors themselves on," says Russell Pearlman, sr. markets editor at SmartMoney magazine in the attached video. "These days everyone is anchored on all the bad stuff that happened in 2008."

Even though that particular fear, or any other fear may be valid, Pearlman says it has caused countless investors to either sit on the sidelines or seek the theoretical safety of Treasuries.

He's certainly not advising investors be cavalier about risk, but he is pointing out the pitfalls of paralysis, saying "what happened in 2008 should not be the be-all, end-all rationale for making an investment or not making an investment."

Confirmation Bias
This trait can be observed both on and off Wall Street and is perhaps the most pervasive mistake we make. As Pearlman says, "this is a behavior that all of us exhibit."

So what exactly is confirmation bias?

"This is seeking out information that confirms what you already know or want to believe," Pearlman says. Apple (AAPL) is a good example, given its meteoric rise and fervently loyal fan base. A mere mention of something critical about the i-Giant is almost certain to trigger an avalanche of counter-attack, rather than evoke a thoughtful debate. This mindset is dangerous and will ultimately hurt you.

The Thrill of the New
Perhaps it is our ever shrinking attention spans or simply the result of a growing stable of incredibly cool gadgets, but Pearlman sees danger in our infatuation with new stuff.

"Everyone loves new things," he says, "but that can work against you too."

The example he uses here is McDonalds (MCD), an unbelievably successful company and stock, that happens to also be in the old business of making hamburgers. The advice here is to be open to all ideas, not just ones tied to new things.

Overvaluing Experts
Our last mental trap that can trip you up is, in a way, a shout out to ourselves. At a time when more information from more places moves faster than ever, Pearlman says it is imperative that investors take some ownership in the decision-making process.

"We assume experts know everything," he says, "often in fields that they're not expert in."
This is in no way a slight to all authority or legitimate expertise, but rather a cautionary caveat to stay involved.


VIDEO in link
Investing 101: The 4 Most Common Psychological Traps | Breakout - Yahoo! Finance

Reply With Quote
The following 2 users say Thank You to kbit for this post:
 
  #2 (permalink)
Trading for Fun
Houston, Texas
 
Futures Experience: Advanced
Platform: Interactive Brokers, OptionsXpress
Broker/Data: Options Express
Favorite Futures: Options on Futures
 
MJ888's Avatar
 
Posts: 165 since Sep 2012
Thanks: 37 given, 126 received

Try not have the CNBC or any other news on when trading. Try to be as methodical as you can be. Follow your plan with as much discipline as possible by buying when you get your usual buy signal and going short when you get your usual short signal. Once you are in a trade and have your stop loss and profit taking orders in place, resist the temptation to adjust them.....just let the trade play out.

Believe me, this is REALLY HARD to do! We are human but we need to be as machine like and emotionless as possible to be successful traders!

Reply With Quote
The following user says Thank You to MJ888 for this post:

Reply



futures io > > > > Investing 101: The 4 Most Common Psychological Traps

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
A Psychological Win Today Blz17 Psychology and Money Management 4 April 3rd, 2016 09:34 AM
Probability 101 Hotch Traders Hideout 61 February 6th, 2015 11:28 AM
Traps and Failures Fat Tails The Elite Circle 20 January 5th, 2011 10:06 AM
My Journey to Psychological and Physical Health ZTR Psychology and Money Management 78 December 30th, 2010 02:19 PM
Psychological Reversed rtrade Psychology and Money Management 14 December 3rd, 2010 07:25 PM


All times are GMT -4. The time now is 05:30 AM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-16 in 0.07 seconds with 19 queries on phoenix via your IP 54.160.245.121