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Faith, luck and other super-natural phenomenon - don't put your trust in these things when trading!

by Timon Rossolimos

Faith, luck and other super-natural phenomenon! So many people depend on these things when trading.

And, the fact is, it's human nature. When you don't know what's going on or you're unsure about something, you search for answers whether they're true or false.

I'm sure there's times when your imagination has run away with you.
Times when you've seen things which aren't there. But today I want to tell you to resist this behaviour as it could lead to very bad trading decisions.

But in order to do that you need to understand how your brain works. So let's look at a recent study I've come across...

How we interpret super natural messages which aren't there to begin with

Over the weekend I was watching a YouTube clip.  This clip prompted me to write the below article and how it applies to your trading performance.

Let's get to it.

Jennifer Whitten (PhD), who's a psychologist at the University Texas Austin, studies how human beings interpret meanings from science and events in the world around them.

She asked a group of people to answer 20 questions electronically. Each question showed a random pattern between two options, A or B. In their mind, they saw patterns between the two options even though there weren't any.

The computer was pre-programmed to tell them each of their answers were 'CORRECT'

At the 17th question, they felt confident and top of the world while going through the test.

Because they were 'winning' of course!

At the end of the test, a 'white-noise' of static was displayed on their screens.

Finally, they were asked if they saw a 'hidden' image within the white and black dots.   

They all confidently said 'no'

Subsequently, Whitten tested a new group with the same test with only one difference.

The computer was pre-programmed to tell them, their answers were 'INCORRECT'.

After 15 questions, you can imagine the lack of confidence and frustration they felt.

When the last question came, they were asked if they saw a picture hidden inside the 'white-noise'.

They all said 'YES'.

They saw objects such as, frogs, trees, houses, people, cups and other pictures which weren't essentially there.

Their state of mind made them see things which weren't there to begin with.

So here's how it applies to your trading.

Why you don't need to rely on destiny to trade

When I started trading, I saw patterns and levels in my losing positions.

If you're a trader, I'm sure you know what I'm talking about.

So seeing these patterns, I kept having the feelings of control when trading.

Little did I know, I was in for a very rough ride!

I started to generate feelings of false comfort and hope. And when looking back at my charts I perceived levels, (supports, resistances and channels), which weren't there to begin with.

At the time, I 'knew' the market was going to bounce off one of those levels and miraculously, bring me back into profit. How wrong I was…

A flood of emotions like fear, greed and the revenge instinct took over.
The outcome was a 15% loss on my portfolio.

But it doesn't have to be this way…Here's why!

Things you can do to stop believing in supernatural events which influence your trading

I went back to watching YouTube to help me get my mind frame back.

I recall hearing a profound quote 'Fear over-rides all rational thinking' which made me realise: 'I need to stick to my trading plan with strict discipline.'

I'm sure there's times when you underestimate yourself. But I'll tell you now, if you have a robust enough trading plan then I know you'll do great trading as long as you're disciplined to keep at it.

You just have to keep riding the trading waves through good and bad because I guarantee you now… there'll be losses – it's the nature of the beast.

But, there'll be profits and you'll need to make sure your profits over-ride your losses.

Many times the trading patterns don't play out, but getting annoyed and aggravated won't help your cause.

So don't resort to the unscientific approach of faith, guessing and proverbial luck. I call this the super natural intervention.

Rather have the confidence that if a trade is going against you it is mitigated by a strict trading plan.

Don't be an optimist looking for other patterns and transcendent levels but instead, exit your positions and preserve your wealth!

There'll be many more trading opportunities you can make up for in the future.

Keep in mind 'Wisdom Yields Wealth"

Timon Rossolimos 

Editor, Trading Tips



Copyright 2016, Fleet Street Publications (Pty) Ltd. The information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. No action or inaction should be taken based solely on the contents of this publication. We do research all our recommendations and articles thoroughly, but we disclaim all liability for any inaccuracies or omissions found in this publication. The past is not a guide to future performance. Trading derivatives on margin carries a high level of risk, and may not be suitable for everyone. Before deciding to trade any type of derivative instrument you should carefully consider your investment objectives, level of experience, and risk appetite. Remember, you could sustain a loss of some or all of your initial investment, which means that you should not invest money that you cannot afford to lose. If you have any doubts, it is advisable to seek advice from an independent financial advisor.

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