Continue reading...FALLING IN LOVE WITH A TRADE
How Loss Aversion and Regret Impact Trading Performance
In his book, Blink, Malcome Gladwell describes an event where the experts from the J. Paul Getty Museum in California encouraged the museum?s purchase of a marble statue purported to be from the sixth century B.C. The statue was an amazingly rare piece with an estimated value of just under $10 million dollars. There was only one problem. The experts from the Getty museum failed to detect what outside experts had suspected and then later confirmed; the statue was a fake. So why were the Getty museum?s experts not able to confirm what outside experts suspected at first glance? Because the Getty museum?s curators desperately wanted the statue to be authentic. Such a rare find would have been a tremendous boost to the museum?s status and prestige.
Traders can fall into the same trap. When you put on a trade, especially if your trading methodology calls for just a few trades per day...
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