Pyschological trading hurdles 1) The desire for instant gratification

Time and time again I have found promising trading opportunities, and can’t wait to get on board, to profit from what I expect to transpire.

Perhaps there has been an exciting news release such as a profitable trading outcome, a favourable analyst report, a new mining discovery, a take-over offer for the company, or an improvement in the trading environment; it could be the successful sale of an unprofitable subsidiary,  a fall in share price that is attracting bargain hunting buyers, a welcomed change of executive officer, or perhaps just a flurry of interest from market rumour and innuendo.

My eagerness is such that rather than miss out on further gains, I place an order at market, and can’t rest content until my order is filled. Then to my frustration, so often the price falls below my entry price as the Impulsive price move that swept me along with it, is moderated by the subsequent Corrective response.

I can’t claim to be immune to such urges yet, but my strategy plan is to consider “fading” excessive impulsive surges in price, and to later look for more favourable entry levels for longer term investment.

Rather than placing orders at market I consider placing my order at levels low in the market depth. It is surprising how often the price action moves sufficiently to fill my order, and frequently the market price will then rebound in my favour.

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