Loss aversion trading

Trading Education Buyer

Trading Education Buyer

Closing trades on fear.

"In prospect theory, loss aversion refers to the tendency for people to strongly prefer avoiding losses than acquiring gains. Some studies suggest that losses are as much as twice as psychologically powerful as gains. Loss aversion was first convincingly demonstrated by Amos Tversky and Daniel Kahneman."

The great traders conserve energy (capital), watch and study the environment around them motionless for hours and days, and take instant advantage of opportunities as they present themselves.The flaw of losers is , when those opportunities turn into danger, they break off and flee immediately.The great traders have balls.

https://science360.gov/obj/video/389d421f-8e6a-4cc4-bc5c-8d08abf8bbdc/chemistry-fear-fright

Loss aversion trading is a psychological handicap of the human brain .Some traders cut profits , in fear of loss , but succesful traders run their profits under the most uncomfortable present situations.The best results are obtained by running profits.

http://www.businessinsider.com/colin-camerer-wins-genius-grant-2013-9?IR=T

https://www.google.co.uk/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=loss+aversion




Please contribute to this thread in a professional discussion
 
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Some think their losses will just keep running so they stop them out.
Some think their losses are just about to turn so they do nothing or add more.

Some think their winners are about to turn so they take a profit.
Some think their winners will just keep running so they do nothing or add more.

Some think their losses will just keep running so they stop them out and they think their winners will just keep running so they let them run or add more. At least they are consistent, they think everything will trend.

Some think their losses are about to turn so they do nothing or add more and they think their profits are about to turn so they take them. At least they are consistent, they think everything will turn.
 
Mark Douglas

  • The winners have attained a mind-set—a unique set of attitudes—that allows them to remain disciplined, focused, and, above all, confident in spite of the adverse conditions. As a result, they are no longer susceptible to the common fears and trading errors that plague everyone else. -Mark Douglas
 
java said:
Some think their losses will just keep running so they stop them out.
Some think their losses are just about to turn so they do nothing or add more.

Some think their winners are about to turn so they take a profit.
Some think their winners will just keep running so they do nothing or add more.

Some think their losses will just keep running so they stop them out and they think their winners will just keep running so they let them run or add more. At least they are consistent, they think everything will trend.

Some think their losses are about to turn so they do nothing or add more and they think their profits are about to turn so they take them. At least they are consistent, they think everything will turn.
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The issue with all of those scenarios is simple..........

THINKING!!!

Teach yourself, not to think, just follow the rules.

To quote Ashy Slashy, " Shoot first, think never!"
 
I don't know why, but I've never had a problem with thinking. Seems like it would be a lot of work. If I wanted to work I could just get a job. I have however noticed that stopping out due to fear it will just keep going and getting flat with a small profit for fear it will go right back to where you got in is an unworkable contradictory use of fear if there is any use for fear at all. Rules are just a lazy man's way of delegating thinking.
 
java said:
I don't know why, but I've never had a problem with thinking. Seems like it would be a lot of work. If I wanted to work I could just get a job. I have however noticed that stopping out due to fear it will just keep going and getting flat with a small profit for fear it will go right back to where you got in is an unworkable contradictory use of fear if there is any use for fear at all. Rules are just a lazy man's way of delegating thinking.
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Ohh I do, everything I think about goes wrong.

It's a TEB thread type taking this wayyyy to seriously.
 
java said:
Getting back to the topic, How far can you go just avoiding bad things?
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Is not ignoring that's the issue, it's thinking, you think you don't want another loss so you close for half your risk.

What you should be doing is the momo is still up, so I'll hold, or it's weak / down so I'll close out and take the hit or maybe profit of it moved enough.

No subjective thinking allowed, just objective, this is X so do Z nothing more required.
 
If you have to "think", you don't know your method well enough, do you have to think about breathing? Be in the zone before you start trading.
 
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