Psychology

Psychology

I have seen the enemy and it is us.

Pogo

Your own internal thought processes and feelings are probably more important than everything else put together. If you do not have your head squared away the way it should be everything else you know about the market will not help you. Therefore it pays to examine your own behavior and feelings both about yourself and the outside world in general. We are a product of our early childhood conditioning which provides us the foundation in which we judge all the experiences we have gone through since. Examine your reactions to various life situations and you will find out a lot about yourself that you might not have thought about before. Think about when someone says your wrong about something, or when the stock you just bought drops 20 percent in one day. That last one happened to me except that it happened in 20 minutes. You get the idea. The way we react to what we face in life and in the market will go along way in determining your success or failure in whatever you decide to do.

Here’s one suggestion. Try not to get too excited when things are going well and avoid getting too depressed when things turn against you. Try to keep things in balance and keep a level head. Imagine yourself on the outside of your life, looking in. Be objective and pause. Take a deep breath and breathe out. Do it again. Gain some perspective on things. Review what you have done in the market and be objective with yourself. Have you made any mistakes? If so don’t beat yourself up about it, try to correct them. Try to learn from them. It’s only a game. If on the other hand you’re doing quite well, stay humble and be thankful. The Gods of Investing and Trading must be soothed and appeased. The market is a mirror to your own internal life processes and will reflect back to you what you are telling yourself.

I’m not trying to sound like the book of knowledge here. Remember this is a diary to myself you are looking into. I’m talking to myself as much as anyone else. One other thing, sometimes there is nothing to learn. Sometimes something bad happens due to bad luck, just a random event. That’s the nature of the markets. Remember in the long run the random events both good and bad will even themselves out. It really is just a game.