Emotions of winning and losing

This is a discussion on Emotions of winning and losing within the Psychology, Risk & Money Management forums, part of the Methods category; Its occurred to me why we get hurt by losing. When you initiate a trade, you enter a grey-zone of ...

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Old Jul 16, 2009, 9:33am   #1
 
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Emotions of winning and losing

Its occurred to me why we get hurt by losing.
When you initiate a trade, you enter a grey-zone of uncertainty.
The market needs to move to either confirm our analysis, or not.

Losses hit quicker than wins.
For example, if you're going for a 3:1 reward-to-risk, the chances are if you lose, you get immediate feedback. But, when you win, you have to wait longer to be proved right, so you remember the hurt of losing more because of its immediacy.

I wonder if the quicker feedback of taking a loss has some bearing on how we feel about them, as opposed to waiting longer for wins.
This assumes a greater reward than risk.

If you go for 1:1, dunno. Perhaps 1:1 should be a starting point for newbies to get past the emotional impact.

EDIT: If you're wondering why I have been posting too much. I have moved to a higher TF, and have way too much time on my hands. sorry!
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Old Jul 16, 2009, 10:11am   #2
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I have weeks between trades so I clog up the board

Erm... I thinks your post is interesting btw but I agree more with the in at the deep end philosophy tbh
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Old Jul 16, 2009, 10:17am   #3
 
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I dunno. When a newbie sees a running loss, they're in a state of woe and hope, possibly pleading and praying. And when it's a running profit, they are in a state of elation and confidence. They are definitely not emotion free during the trade.
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Old Jul 16, 2009, 11:21am   #4
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I'm emotion free (until I go into a loss lol) but I find myself unable to concentrate on other tasks when I walk away from a trade and leave it running -which was part of my plan to get used to having money on the line. Suppose it's because I'm poor
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Old Jul 16, 2009, 11:39am   #5
Joined Jul 2008
Quote:
Originally Posted by trendie View Post
Its occurred to me why we get hurt by losing.
When you initiate a trade, you enter a grey-zone of uncertainty.
The market needs to move to either confirm our analysis, or not.

Losses hit quicker than wins.
For example, if you're going for a 3:1 reward-to-risk, the chances are if you lose, you get immediate feedback. But, when you win, you have to wait longer to be proved right, so you remember the hurt of losing more because of its immediacy.

I wonder if the quicker feedback of taking a loss has some bearing on how we feel about them, as opposed to waiting longer for wins.
This assumes a greater reward than risk.

If you go for 1:1, dunno. Perhaps 1:1 should be a starting point for newbies to get past the emotional impact.

EDIT: If you're wondering why I have been posting too much. I have moved to a higher TF, and have way too much time on my hands. sorry!
As a newbie trader, I've been on an emotional rollercoaster for 6 months, but the more I trade, the easier the emotions become, win or lose.
I think that, if you have a rational, methodical approach, you can factor out the worst of this rollercoaster.

Last summer I took the kids to a water park in Spain, and watched people jumping off the Kamikaze water slide. This is like a 50 metre vertical drop, and looks absolutely terrifying. After watching for 30 minutes, I realised that no-one had injured themselves. The perception of danger was worse than the reality, so I climbed up and took the jump - it was an awesome experience!

It's the same in trading - if you stick to a strict discipline, there is little danger, and emotions are reduced.
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Old Jul 16, 2009, 11:51am   #6
 
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Much like rock climbing. I see people falling off all the time but because they're roped, don't get injured. Still not nice when you're hanging off a steep overhang with two fingers and there's a big drop under you, though...
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Old Jul 16, 2009, 11:54am   #7
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Illogical
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Old Jul 16, 2009, 12:07pm   #8
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Quote:
Originally Posted by shadowninja View Post
Much like rock climbing. I see people falling off all the time but because they're roped, don't get injured. Still not nice when you're hanging off a steep overhang with two fingers and there's a big drop under you, though...
Yeah - great analogy! I was a rock climber for 10 years in my youth, and apply the same mind-set to my trading!
Fixing good protection will save you in a fall.
I remember a famous solo climber in the 80s called Jimmy Jewel. He had solo climbed many of the Uk's hardest rock climbs, but tragically fell to his death off a simple climb.
Trading without a stop loss is like climbing without a rope.
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