Do you trade for money or emotional satisfaction?

[analyst75]

DO YOU WANT TO BE ENTERTAINED OR RICH?…IT’S YOUR CHOICE

 

I came across this excellent chart the other day. It shows those times in history when the S&P 500 doubled over a ten year period and the trajectory that this doubling took.

 

Please see here for a relevant chart: https://www.tradinggame.com.au/want-entertained-rich-choice/

 

Much commentary that followed on twitter related to the steady low volatility climb that characterised the latest run and how boring this was. One of the interesting thing about markets and money in general is that people betray their true desires and personality.

 

Markets are the true window into the soul and in this instance what traders were actually saying is that they wanted to be entertained and not rich. The constant current moaning about the lack of volatility is little more than the plaintiff cries of children who bedevil their parents every school holidays with cries of …I’m bored.

 

This lay observation tallies with what others have found. The seminal work in this field of trader immaturity is An Analysis of the Profiles and Motivations of Habitual Commodity Speculators by W.B. Canoles, S.R. Thompson, S.H. Irwin, and V.G. France. I have summarised their findings below and have added my own emphasis.

 

“The typical trader assumes a good deal of risk in most phases of his life. He is both an aggressive investor and an active gambler.

 

 [He] does not consider preservation of capital to be a very high trading priority.

 

As a result, he rarely uses stop loss orders. He wins more frequently than he loses (over 51% of the time) but is an overall net loser in dollar terms. In spite of recurring trading losses, he has never made any substantial change in his basic trading style.

 

To this trader, whether he won or lost on a particular trade is more important than the size of the win or loss. Thus he consistently cuts his profits short while letting his losses run.

 

 He also worries more about missing a move in the market by being on the sidelines than about losing by being on the wrong side of a market move; i.e., being in the action is more important than the financial consequences.

 

Participating brokers confirmed that for the majority of the speculators studied, the primary motivation for continuous trading is the recreational utility derived largely from having a market position.

 

Numerous indications in our survey indicate that they are not trading solely or even primarily for profit, but may be maximizing excitement or the number of winning trades.”

So we come back to the original question. Do you want to rich or be entertained as the choice is entirely yours.

Author: Chris Tate

Article reproduced with kind permission of Tradinggame.com.au.

The article is concluded by the quotes below:

 

“It's in your best interest to focus on building your trading skills rather than on achieving a huge profit every month.” – Joe Ross

 

“No matter how good you may think you are, nobody is bigger than the market and it will beat you to your knees if you don't treat it with the respect it deserves.” - Adrian Alberts 

 

“Trading does not have to be very difficult — what can be difficult is finding the right path early on and properly understanding the major impact of your mental state on your trading results” - Gabriel Grammatidis 

[saturnnetwork]

i trade to following my strategy

[Ariel Dala]

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[Erienner]

in general, of course, many do this purely for the sake of money, but for the rest it’s also a hobby

[Cairdarsy]

must be able to combine all the same))

[Juleenelya]

always need to be able to combine! otherwise the result will be too weak

[Cairdarsy]

On 7/3/2020 at 6:11 PM, Juleenelya said:

always need to be able to combine! otherwise the result will be too weak

you say everything right, because such a process will bring both pleasure from work and good profit, and what could be better?)

[Tindenucac]

everyone does it for the sake of money and profit, as a result of such work is a pleasure

[Cairdarsy]

of course, everyone trades for the sake of making money, but whether it brings pleasure or not is a completely different outcome

[gds221]

Initially, the goal of my work was still profit, but now moral pleasure also plays a very important role.

[Erienner]

In general, these two factors must be combined, then the trading results will be at their best.

[gds221]

Initially, I traded for profit, but now I often trade because I can't do it otherwise.

[Pyridge]

the best option is to combine both moments, so it will be most productive

[Gidencenti]

in general, not everyone can combine such moments, for some it is a hobby, for others it is an option to make good money

[Erienner]

those traders who know how to make money on Forex, know how to get pleasure from it

[Tindenucac]

whoever answers this question to you and everyone trades for profit, this is the truth of life

[Cairdarsy]

if you learn to combine these two concepts, then there will be just perfect work

[Gidencenti]

Well, if a trader works on both options, then he will get the best results of work, because this is an ideal combination

[Vaabum]

Initially, trading for me was just a way to make money. I studied just to make money. Now, as a result of work, I even get pleasure from work.