Hope - A Deadly Word For Traders

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'The speculator's deadly enemies are: Ignorance, Greed, Fear and Hope.'
Reminiscences of a Stock Operator by Edwin Lefevre.

Hope is basically an ego defense - we don-t want to admit that we are wrong on a trade. The ego wants to uphold an ideal version of self that allows for only successes and not failures. Many traders lose millions of dollars trying to protect the ego's version of reality. Your goal should be to trade without ego, without personal judgment of your self worth. In order to make money trading, your goal is to keep losses small while letting winners run. Make an assessment of your trades each day, and when you start to feel hope coming on, make a resolve to exit these situations and eradicate hope from your trading behaviors.
 
"The speculator's chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation when the market goes against you hope that every day will be the last day--and you lose more than you should had you not listened to hope--to the same pioneers, big and little.

And when the market goes your way you become fearful that the next day will take away your profit, and you get out--too soon. Fear keeps you from making as much money as you ought to. The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. he must fear that his losses may develop into a much bigger loss, and hope that his profit may become a bigger profit. It is absolutely wrong to gamble in stocks the way the average man does." ...... Jesse Livermore

" The unsuccessful investor is best friends with hope - and hope skips along life's path hand-in-hand with greed when it comes to the stock market. Once a stock trade is entered, hope springs to life. It is man's nature to be hopeful, to be positive, to hope for the best. Hope is an important survival technique for the race. But hope, like it's stock market cousins: ignorance, greed and fear all distort reason. " ...... Jesse Livermore
 
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