10. Trading Psych 101: Volume And Emotions - by ZeeFreaks (zeefreaks.blogspot.com)

Volume of Emotions

Great things start with small beginnings.

Most traders when starting out, make the mistake of trading 

with all they have, trading big or going all in - Instead of experimenting and starting small.

The path to a consistent, profitable system, always starts with

 experimentation. Because admit it, even if you read all those 

books and blogs, mimic your favorite guru, watch

 expert trading videos... 

Knowing...

 is very different from Doing.

One of the basic self-check, flow chart a beginner 

must have when trading is this.

It always starts with a trading plan.

And the emphasis is more on the volume of the trade

and your mental state if ever you lost the trade. 

Why?

Because the trader's mental and emotional capacity has an

interesting correlation to the volume of the trade.

Confused?

Here's an example.

Scenario 1:

You allocated 1/10th of your portfolio to DNL.

Whether you win or lose, this will probably be your reaction:

Nothing much really. Because the volume wasn't 

that significant to move your port to begin with.

----------------------------------------------

Scenario 2:

You allocated at least 1/2 of your port to TAPET

at the lows before it went sky high.

Your probable reaction?

#YOLO

You get a confidence boost - Feeling like some 

hero or tyrant that can conquer anything in the world.

----------------------------------------------

Scenario 3:

You went all in FNI because of strong FA and TA.

(Facebook Analysis / Tsismis Analysis)

Your reaction?

(Admit it... you sang that one out)

----------------------------------------------

Makes sense now huh?

Now when you document a trade, add up the numbers. 

And after getting a hefty sum of trades, review and look for 

the plays you are strongest and those that you are weakest.

(Sample Trade Stats)

This doesn't mean that you should stop trading the setups that you

 are weakest. But it should be a challenge for you to experiment

 and practice until you finally get your batting average 

into the green.

These numbers speak out to YOU. Think of the 'wins' column 

as confidence points. The greater the wins you have, the 

more volume you can allocate. The greater the losses 

you have, the lesser the volume you should commit.

When you gain confidence because of the numerous trial and 

errors, and when you can properly handle and tolerate losses to a

 certain degree of exposure, only then should you "up the dose."

Now why am I emphasizing on Losses? 

Because when I started out, I remembered and learned 

from my losses more than my winning trades.

Everyone loses. But the only time it truly becomes a loss, 

is when you don't learn from the experience.

Source: 10. Trading Psych 101: Volume And Emotions - by ZeeFreaks (zeefreaks.blogspot.com)

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