Trader and Modern Psychoanalyst looks at fear and greed

N

neisykay

Hello everyone - I have been a day and position trader since the summer of 1994. I also have my Master's degree in Classical psychoanalysis from the University of Chicago and now am working on a doctoral degree through the Institute of Modern Psychoanalysis in NYC. Modern psychoanalysis is VERY different from the Freudian stuff we all know a little about....

anyway... I am doing a bit of a study on HOW fear and greed manifest themself in relation to trading decisions. I am interested in the FEELINGS traders get as trades are either working or not working....

The point of this is that I am going to try to write an useful article on how to USE THE EMOTIONS to overcome them - sort of the core of the modern psychoanalytic technique.

If anyone would like to tell me their perspective, I would greatly appreciate it.

Thanks, Denise
 
Quote from neisykay:

Hello everyone - I have been a day and position trader since the summer of 1994. I also have my Master's degree in Classical psychoanalysis from the University of Chicago and now am working on a doctoral degree through the Institute of Modern Psychoanalysis in NYC. Modern psychoanalysis is VERY different from the Freudian stuff we all know a little about....

anyway... I am doing a bit of a study on HOW fear and greed manifest themself in relation to trading decisions. I am interested in the FEELINGS traders get as trades are either working or not working....

The point of this is that I am going to try to write an useful article on how to USE THE EMOTIONS to overcome them - sort of the core of the modern psychoanalytic technique.

If anyone would like to tell me their perspective, I would greatly appreciate it.

Thanks, Denise
More...

Here's how it plays out for many. When a trade is going their way, greed kicks in and (assuming they have a winning strategy) instead of sticking to their exit rules, they'll either take profit too soon (gives the feeling of accomplishment, even though it was the wrong thing to do) or let a winner turn into a loser (this one really hurts, will sometimes cause you to next time take your profits too soon, and vice versa), ignoring the facts of the price action in front of them. When they're in a loser, fear kicks in. Instead of sticking to their rules they'll start holding longer than they should and start 'hoping' that the position will come back into profitability, only taking their losses after they've lost more than they can bear.
 
It's only fear.

Greed is fear of leaving too much on the table.
On taking a loss, it's the old flight or fight built into our system, the basic self preservation instinct. Best way to minimize the effects, is focus on emotional detachment. Not too easy but doable.
 
Quote from neisykay:

Hello everyone - I have been a day and position trader since the summer of 1994. I also have my Master's degree in Classical psychoanalysis from the University of Chicago and now am working on a doctoral degree through the Institute of Modern Psychoanalysis in NYC. Modern psychoanalysis is VERY different from the Freudian stuff we all know a little about....

anyway... I am doing a bit of a study on HOW fear and greed manifest themself in relation to trading decisions. I am interested in the FEELINGS traders get as trades are either working or not working....

The point of this is that I am going to try to write an useful article on how to USE THE EMOTIONS to overcome them - sort of the core of the modern psychoanalytic technique.

If anyone would like to tell me their perspective, I would greatly appreciate it.

Thanks, Denise
More...


Denise,

My curiosity is piqued. In general terms, how do you propose to use emotions to overcome them? And what are your views on CBT in this regard?

Regards,

Thunderdog
 
CBT works situationally but it is "medicine that has to always be taken in order for the patient to do better."

My approach is to address the underlying force and source of the emotion itself in order to mitigate or even eliminate the existence of the pesky emotions in the first place. In other words, moving from vigilant control to being able to be "in the zone" - so to speak.

One of the specific problems I hope to address with this is the phenomenon of being able to make money - and then mysteriously have to give it back.

Denise
 
Quote from neisykay:

One of the specific problems I hope to address with this is the phenomenon of being able to make money - and then mysteriously have to give it back.
More...
Very interesting!

So you are conducting the study to overcome issues with your own pyschopathology? I guess that's a double benefit for you.
 
I have always been really good at killing my losers quickly, but it's my winners that I tend to screw up. My worst fear is a decent sized winner (meaning greater than 0.50-I only daytrade stocks) turning into a break-even or worse, a losing position. I have found the pain of watching a winning position turn into a losing position to be the most painful part of trading. So to avoid this I start liquidating my position as it becomes profitable. However, this approach does not maximize my winners and results in a lot of money being left on the table. But I have to do this because if I take some profits on a winning position, it is much easier to kill the remaining position when (if) it comes back to my entry price. If I don't take some profits on the winning position and it comes back to my entry price, I tend to get mad and not kill it like I am supposed to and then it becomes a loser and I just get madder and usually screw up the next trade cause I am mad. What a vicious cycle that can be!!
 
....actually i solved that problem a long while ago so i thought it might be nice if i could help others solve it too. but what works for me, may or may not work for others.

thought i would learn from others on how also to help them.
 
I think you know that you have lots of company..... my biggest interest is ultimately creating a method out of modern psychoanalytic techniques that solves these common trading problems.

Thanks for your post.

D
 
Quote from neisykay:

CBT works situationally but it is "medicine that has to always be taken in order for the patient to do better."

My approach is to address the underlying force and source of the emotion itself in order to mitigate or even eliminate the existence of the pesky emotions in the first place. In other words, moving from vigilant control to being able to be "in the zone" - so to speak.

One of the specific problems I hope to address with this is the phenomenon of being able to make money - and then mysteriously have to give it back.

Denise
More...


Sounds interesting. Please post your article when you have completed it, and good luck with your research. I have no doubt it will be interesting reading.

Regards,

Thunderdog
 
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