“Hope is not a strategy: it’s a simple emotion.” said retired army Major General William Nash. He was speaking about the war in Kosovo. I laughed and thought about trading. I remembered times when hope was just about the only strategy I had.
One could say this about almost any emotion and trading. Greed is not a strategy; it’s a simple emotion. Fear is not a strategy; it’s a simple emotion. Sometimes, unfortunately, fear or greed, hope or determination does become a trader’s basic strategy.
Trading becomes dictated by emotion rather than a consistent strategy for entering and exiting the market.
Simple emotions are not an effective strategy. The Major General was right; a strategy built on emotions will be at best, inconsistent and disastrous at worst.
An emotion is a response to a thought that expresses itself in the body. That is why we call them feelings. We feel the emotion in the body. Emotions are the body’s response to a thought. An emotion responds to a thought and soon that emotion affects other thoughts as well as actions which in turn express themselves in more emotions felt in the body. We build an interactive cycle between thought, feeling, and action.
Most traders say they don’t want to experience any emotion. They want to respond like a computer, a machine. Traders aren’t isolated machines, unconnected to a feeling body. They’re humans with potential for feeling. Mind and body interact. They are correspondents.
If you want to respond as a computer, you can set up your trading to be completely computerized. You can even have the computer place the orders electronically. This takes you completely out of the loop. No harm here, but you won’t have human input as to visual patterns or current events.
My computer mentor tells me that computers are simply a combination of on-off switches, and don’t begin to have the power of a human mind.
Probably not, however, if the human mind is hopelessly emotionally conflicted, the computer is a good idea. My guess, nonetheless, is that if a person is emotionally entangled, she won’t be able to leave the computer to do the work without her intervention.
Author Ruth B