Emotional Decision Making

Two great post's from other people's blogs from last month I found particularly helpful and lead me to a couple "aha" moments.

It really should be obvious that emotional decision making is flawed but for some reason its not obvious enough. Think about how many couples break-up in the heat of the moment and then get back together after things settle down. Or how many children, in a moment of not getting what they want, decide that they're never talking to their parents again. Only to happily eat dinner with them an hour or two thereafter.

I'm beginning to analyze my emotional state at an ever increasing level. If I'm feeling any emotion, good or bad, while trading I'm strongly re-considering my actions before putting the trade on. Quite literally I'm not seeing reality if I'm emotionally imbalanced. This often leads to giving profits back or digging a deeper hole when placing trades. During a trading session I'll often times only be emotional for perhaps 10 to 20 minutes of the session. As soon as my internal "emotional threshold" is breached I now know I LITERALLY CANNOT PLACE A TRADE BECAUSE I'M NOT SEEING REALITY. I must wait out the emotional storm, good or bad, and take the next opportunity that presents itself when I'm in the PROPER FRAME OF MIND.

Being a discretionary trader the proper frame of mind is more important than any pattern the market is presenting as an opportunity. Because the only way I can be certain that I'm seeing the actual pattern the market is presenting is if I'm in the proper, balanced, frame of mind.

Here are the two posts that helped me realize this;

The long term effects of making decisions when you're upset

&

Tilt The Odds