2024-05-06

Trading Psychology Tip: Embrace the Uncomfortable to Succeed

When it comes to trading, following the crowd or sticking to your comfort zone can often lead to missed opportunities and regrettable decisions. The counterintuitive nature of trading psychology can be a hard pill to swallow, but mastering it can lead to remarkable success in the markets. The concept of doing what feels uncomfortable is not just a theory but a practice endorsed by many successful traders. This article delves into why embracing discomfort may just be the key to unlocking more profitable trading strategies.

Understanding the Psychology of Contrarian Trading

The Fundamental Contrarian Approach

In trading, moving against the tide of common reactions can be a competitive edge. When the market panics or becomes overly excited, it might be the best time to look for opposing opportunities. The principle is based on the reality that markets often overreact, both on the up and downside, presenting opportunities for those who can keep a clear head.

Example from Marty Schwartz

Marty Schwartz, a renowned trader, in his book Pitbull, mentions a radical yet effective strategy. He advises that when a trade is going against you to such an extent that you feel physically ill, instead of exiting, consider doubling down. This is based on his belief that such intense emotional responses often occur at the brink of a market reversal.

Embrace the Break-Even Paradox

A common scenario traders face is having a losing position finally recover to their break-even point. The typical and comfortable reaction here is to sell the position to avoid any further potential losses. Contrarily, this might be an opportune moment to add to your position. Holding or even buying more can sometimes lead to higher gains as the market may just be starting to move favorably.

The Tesla Case Study

Consider the example of Tesla stocks, as shared in the video. A trade that once down, recovered to the acquisition cost, which for many would signal a break-even exit point. However, just after these positions were closed at break-even, the stock price significantly increased. This example underscores the potential missed opportunities by choosing comfort over calculated risk.

Trading Against Comfort: Key Strategies and Mindsets

High Buy, Higher Sell

In his influential work, Market Wizards, Jack Schwager discusses how true market profitability often requires doing the opposite of what seems comfortable. Buying low and selling high may appear logical, but the market conditions that allow for buying high and selling higher often result in greater profitability.

Understanding Emotional Relief in Trading

Exiting a trade at break-even offers significant emotional relief—a compelling reason many traders prematurely exit a position. But if the market reaches your break-even point, it might be a signal not just to hold, but to increase your stake.

The Role of Emotional Discipline

Maintaining emotional discipline is crucial. The markets don’t reward comfort; they reward courage and calculated risk. Condition yourself to withstand and act against emotional impulses suggesting immediate relief or escape from uncomfortable positions.

Thriving in a Counterintuitive Trading World

Thriving in trading requires adopting strategies that may initially feel counterproductive or daunting. The key lies in leveraging emotional discomfort as a signal to rethink your strategy rather than retreating to safety. By understanding and integrating these principles, traders can potentially enhance their decision-making process and achieve greater success in the highly volatile trading environment.

In conclusion, while the markets remain unpredictable, developing a mindset that welcomes these counterintuitive approaches could be your indispensable tool in navigating them successfully. Whether you’re a seasoned trader or just starting out, remember that in trading, sometimes the best move is the one that feels the least comfortable.

Watch this video below for the full details:

2024-05-06
Visit https://www.t3live.com/sami-unsexy-ebook-youtube to learn Sami’s trend analysis secrets.

In this #tradingpsychology video, Sami Abusaad explains:

-Why you should sometimes buy when you are desperate to sell
-Why you can’t do what’s comfortable in trading
-A key psychology lesson he learned from Tesla

And MORE!

Don’t forget to pick up your copy of Sami’s eBook: https://www.t3live.com/sami-unsexy-ebook-youtube

Video transcript:
is very counterintuitive most of the time when you feel very very strongly about something it’s you should do the opposite when you feel very very strongly about something you should do the opposite most of the time um it’s like U um I don’t know if you if you read the Marty Schwarz book it was called Pitbull and he said that when he he was taught that when he’s in a trade and it’s going against him and he can’t take it anymore and he feels is like puking he said that’s when he doubles up or that’s when he you know used to double up the position another counterintuitive thing is if you’re in a position and you know let’s say you’ve been in this position been losing money for a long time and it fin finally got to break even people what what do people do like almost 100% of the people the Traders out there when they’re when the trade finally gets to break even what do they do they sell it you should actually add to it probably I’ll give you an example real quick um my brother-in-law I gave him Tesla at 113 my own brother and my brother-in-law I gave him Tesla at 113 is where they got it right he was down on it like a considerable amount so when when it got to 170 exactly he got out of it because that was his break even point I I told my sister to tell him don’t get out of Tesla because I I knew he was he was going to get out he he had been telling me he can’t wait for it to get to break even and it was at 170 from he got out it shot up to 300 that was back here 170 it got to 299 so what what’s the moral of the story the moral of the story is what typically feels the right is the logical or right thing to do is usually the wrong thing to do in trading it’s very counterintuitive one last thing about this is in the in the book um Market Wizards by Jack schwager he says the market doesn’t pay you to do what’s comfortable it pays you to do the uncomfortable thing such as buying low and selling High that’s comfortable that’s why it usually doesn’t work buying high and selling higher is usually the way it works right that’s one thing another thing is you know if you’re if you get out if let’s say you you know you’re in the stock at you bought it at 200 dropped to 100 and now it’s back up to 200 it feels it it it gives you great relief to get out of it at break even so it gives you that’s comfortable that’s what everybody does the market doesn’t work like that if it actually gets to 200 your break even point you should probably add to it or not exit if you ever look for comfort in trading if you ever do what’s comfortable you can be sure it’s the wrong thing to do in trading it’s just the way it is unfortunately I wish trading worked the other way around meaning doing what’s easy what’s comfortable is what made money but it that’s not the case at all want unsexy but proven tips from a professional Trader well then I’m your guy I’m sharing these trading methods for free in my ebook unsexy Trend analysis secrets that generate beautiful profits this book is focused entirely on the same trading strategies that I use and refine every single trading day now I’m not promising that these methods will make you an overnight millionaire of course but they are the foundational skills behind my many years of success and have benefited the countless students that I’ve shared them with I can’t wait to share my methods with you and I know I will be hearing from you soon hit that link now