Reasons to Trade

One of the critical elements of trading he addresses is the psychological. Many of us have heard and mouthed the rubric that the markets move on fear and greed, but few of us have taken the time to understand how those emotions really work in moving stock prices.

It seems obvious that we trade to make money, but that may not be the real motivating factor for many. There can certainly be a "rush" from making trades. Some traders, it seems, trade just to trade. They are caught up in gambling mode and, for them, it seems critically important to trade without real regard to real liklihood of success. In spite of the market conditions they continued to make trade after trade even though only few were successful. I asked him why they were doing that and said to have money working all the time.

Clearly, there are times to enter bullish trades, times to enter bearish trades, and times to go play golf or go fishing or do something other than trade. If we do not recognize and believe that there are times not to trade, our successes will at least be seriously undermined by our losses if not completely outpaced by them.