Is is useful to "trade emotions"?

[xche6670]

I read books saying traders cannot trade with emotions, which will cause biased view about the market. However, I just don't understand, how exactly, through which channel, emotions hurt trading.

I started to think of this when I found myself greedy and buy at the top, while fear and sell at the bottom, such an idiot behavior. Now my thinking is: the most harmful emotions are greed and fear. However, emotions themselves are not the problem, and the real problem is these emotions come at the WRONG TIME. I am always greedy at the top and fear at the bottom. If, instead, assuming I am greedy at the bottom (so I'm eager to buy) and fear at the top (so I'm eager to sell), then I would welcome emotions to my trade.

Here comes my key point and question: if I do not force myself to be emotionless, but let emotions come spontaneously, so when I become greedy I would guess it's the top, and when I fear I would guess it's the bottom. Of course, I don't dare enter a trade using this method, but would this method save me some trading mistakes?

 

[BeginnerJoe]

Your fear and greed comes from not knowing what will happen next. If you work on your ability to understand how the market works and attain a good nose for detecting what will happen next, emotions needn't play a part.

Trading is like sports, the main component for success is to master the technique for playing the game. For some, this comes naturally (in sports or trading). For others it's a life time of practice until they get better.

Like in sports, just having good emotions/psychology alone will not get you wins. You have to have good technique and understand the game. Of course, having the correct emotions/psychology does help in situations when you make mistakes in your technique. Mistakes are unavoidable even for the most masterful of professionals. But the best will not let their emotions affect their performance when they are under pressure from mistakes or from unforeseen factors.

Emotions/psychology is the last line of defence against disaster. These should be used sparingly. For trading, you should rely entirely on technique and understanding of the game. Same in sports, to win a game of tennis, you have to know the technique to play it. Other than a fluke, emotions will have little impact on the outcome of the game if you don't have the technique. But if you have the technique and an unforeseen situation arises such as when you are 2-0 down, positive emotions/psychology will then help carry you through.

You only need to know one thing: learn and master the technique of the game. It will allow you to win in trading as well as in tennis.

 

[DionysusToast]

It is fine to trade emotions as long as they aren't you own.

Anyway - since when is greed an emotion?

I think stupidity comes into play to a large extent. That is why you buy highs & sell lows. It's all part of the learning curve. Lose enough money doing this and you will stop.

 

[xche6670]

to BeginnerJoe:

Many thanks! Now I understand much better. Very insightful analog between trading and sports.

 

[yellowfloyd]

I think in future when Robots will place trade and win everything but don't know what they will do with the money?