Anxiety Clouds Judgement

At some point, every trader will take a loss.

And I discovered long ago that if I accepted my losses and moved on without serious soul searching, I would not reach my full potential as an Options Trader.

Things happen in the Market that are outside of my control. But those trades don’t concern me, as I prepare for the next trade.

The trades that really turn my stomach inside out are the opportunities I miss because of my own shortcomings.

And 95% of the time it’s because of one simple reason: I’ve allowed Anxiety to Cloud my Judgement.

If you’ve been trading for any amount of time, you’ve most likely had this happen.

It usually starts with playing the “what if” scenarios in your mind.  Once these games start, you’d be better off shutting down your computer and doing something else… because you are no longer objective.

Trust me…I’ve been there in the past… and it’s no fun!

The excitement of this trading “game” clouded my judgment to the point where I made boneheaded mistakes and needlessly rushed into trades.

Fortunately, I found a cure… that cleared away the confusion.

The first and most important thing was a proven tried and true trading plan that eliminated all the subjectivity from the trade…. and something every All Star Trader has in their arsenal.

The second was a little trick most traders never do, but made a huge difference: I would take time every day to picture in my mind what the perfect trade set up looked like. Since I’ve been doing this for so many years now… I can see it clearly in my mind even as I write this.

There is no “guess work” involved, and executing the trade becomes much easier because I’ve seen it so many times in my head.

Anyone can look back at the chart and say “I would have done this right here.. and this is how much I would have made”.  While there is some value in backtesting, most people use that as a crutch and not an opportunity to test their skills.

Now is the time to take full inventory of your trading.  Use a critical eye when analyzing your trading plan and trades that have gone bad.

Try to determine how you can keep from repeating those same mistakes in the future.

And by all means, if you don’t have a tried and true trading plan with clearly defined entry points, stop trading until you get one.

If you do this each week I can promise you, you’ll become a better option trader in the next year, rather than just an older one.

Talk soon,

JZ

P.S.   If you need a trading plan that has been tested for years go to my website and get a copy for yourself at www.JeffreyZiegler.com



One Response to “Anxiety Clouds Judgement”

1. Connie says:

   June 23, 2010 at 5:20 am

   Thanks for the insight Jeff. This really helps to put things in perspective. I’ll definitely try the visualization technique.