Monday 30 May 2011

Trading imbalances lead to Bi-polarism.....

ALL investors suffer from inherent predispositions which are usually negative in contradiction. It's undeniable and financially fatal. Overcoming these behavioral inconsistencies is obviously complex but necessary!

Illustrated simply and one of the more common examples of inherent predisposition is the fear of 'selling-at-a-loss'. 'Selling-at-a-profit' is inherently easy to execute. 'Selling-at-a-loss' however, is inherently difficult for some and worse still, impossible for others. It's often the 'buy low and sell high' gag [ a hoary chestnut..!] that prevents traders from admitting an obviously incorrect transaction and cutting an early loss. To make matters worse, winning trades are sold (inherently easy..) to fund losing trades!     'I'll average down......' (9/10 times a fatal eventuality.)

Overcoming these inherent flaws requires some introspection and for some it's too difficult. Nevertheless, recognising inherent behavioral flaws and with some independent professional assistance, your chances of success will be greatly improved.

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