Be Mindful of Your Current Mental State

Why is it that my portfolio value keep oscillating between $135K and $145K?  Why is it when I got into “firefighting” mode, I seem to be able to reduce the red (majority of the time)?  I don’t know the exact psychology.   When I’m on the high side of the portfolio value,

  1. I become greedy and want to break the “ceiling”.  As a result, I do not take profit when I have to.
  2. I become complacent and take more reckless trades and get wiped out.
  3. I become more arrogant and fade and trends more and get wiped out.

When I’m on the low side of my portfolio value,

  1. I become fearful and I cut losses quickly.
  2. I am humbled and do not fade the trend.

Similar psychology seems to be at play within any given trading day regardless of current portfolio value. Trade in the morning when you start fresh both mentally and in terms of profit and loss.

  1. Late in the day, if you have already booked profits, you will likely trade more recklessly due to greed and get wiped out.
  2. Late in the day, if you have already booked losses, you have to cope with ego and the temptation to get even — a recipe to get wiped out.

Portfolio Value: $140,800.

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