Hope and Fear

I completely agree with this statement and feel that this is probably the major demise of most new traders. The inability to swap these two emotions which are the essential foundations for long term profitability.

I completely agree with this.

Hope and Fear can be your ally or your demise. The choice is yours, and you are making that choice each day.

Here is a quote from legendary trader Jesse Livermore:

"The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit."


Livermore is saying, you must fight two natural instincts:
1. When in a losing trade, the baseless hope that it will come back and let you out without a loss. This causes you to allow losses to run against you, small initial losses develop into big catastrophic losses.
2. When in a winning trade, the fear that it will come back and steal your profit. This causes you to take a quick profit, only to watch time and again as the market runs much further without you.

Combined these two result in large losses and small profits. Livermore teaches you need to reverse this equation, to succeed you need large profits and small losses.

"He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit."