Only then did they return to trading.Īnd that is the key. Instead, they doggedly tracked down the sources of their poor trading and did not stop in their analyses until they figured out where they had erred. The third group was also quite frustrated with losses, but those traders stayed at their desks and they stopped trading.Their goals were to regain emotional equilibrium and not let frustration drive their decision making. They took breaks in their trading, calmed themselves down, and often stopped trading for the remainder of the day. The second group was also frustrated with their losses but was determined to not allow those losses to pile up. They took losing money as a kind of affront and redoubled their trading efforts. They were clearly frustrated with their losses and driven to get the money back. The first group kept trading after losing, often by increasing their risk-taking.'When I first worked with traders in financial markets on a full-time basis, I was struck by how they responded to losses in their trading. The following are his thoughts on how traders respond to losing money. Brett Steenbarger offers insight into the psychology of trading.
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