SPECIAL: Get Chris Rowe's #1 Stock Pick for Free Here

Articles

By: Chris Rowe — November 4, 2015

How to Manage Your Emotions

First, there’s something we must decide on… and we have to stick with that decision for life.

We must decide if:

a)  our aim is to always position ourselves to profit from what is most likely to happen next (what historically has has been the most common outcome,) or

b) our aim is to position ourselves to profit from what we think is going to happen next in the financial markets.

The latter is a mistake. Don’t position yourself to profit from what you think is going to happen next in the stock market, bond market, futures market etc..

No offense, but...

Who the hell are you to opine on future stock prices?

Having an opinion on whether stocks are undervalued or overvalued implies:

  1. That you believe you're correct in your market opinion while those who are actually rich enough to move the stock market are wrong for pricing it there.
  2. That you somehow know whether or not the guys trading enough money to move stock prices will eventually see your point, rather than continuing to act irrationally.

You know neither.

You have no crystal ball.

Neither do I.

Once you embark on the journey of learning technical analysis, you’ll be able to clearly understand what the market is doing.  And that is the smartest and least stressful way to get rich in the stock market.

It's really that simple.  Learn how to clearly see what's happening NOW.  Not in the future.

And that is the first step in managing your emotions.

style="text-align: center;"**********************************************************

Find out which sector ETF was highlighted, JUST YESTERDAY, in our

Featured Sector of the Month video.

2015-11-02_23-26-20

Stocks in this sector fund broke new highs weeks ago.

**********************************************************

 

Think you know what's happening now?

Knowing what a major market average is doing doesn’t mean you clearly understand what the stock market is doing.

2015-11-04_00-33-381

So step 1 in emotion management is to let go and just admit that you don't know whether a price is fairly valued or not.

Ahhhh.

Doesn't it feel better already?

As a reminder, we started the article saying:

We must decide if our aim is to always do what has the highest probability of success, or if our aim is to position ourselves to profit from what we think is going to happen next in the financial markets.

The actual outcome is of little importance.  ("HUH"?)

Once we decide we always want to position ourselves toward whatever has the highest probability of success, then we can agree that whether the trade is profitable or not says nothing about whether we were "right" or "wrong".

We were "right" because we did what tends to have the highest probability of success. Doesn’t matter if it was actually profitable or not. We did what was right. Sometimes it doesn't pan out - that's all.

And that’s the kind of mindset you must have when you use a proven investment methodology. Because there will be times when it doesn’t work for a while.

After you admit you don't really know how stocks should be valued and it wouldn't matter if you did, learning technical analysis as well as risk management strategies is the key to managing your emotions.

Technical analysis is just what I always tell my kids – actions speak louder than words.

All you’re doing is seeing the truth. Forget what the experts on CNBC are saying. Don’t worry about what the newsletter online fundamental analysis guys or the economist says at the wirehouse brokerage firm.   Instead, look at what big investors are actually doing with their money.

You may know the names of some celebrity investors but the market is made up of way more than the Buffetts, Icahns and Coopermans… and when prices are moving and trending then that’s the market showing you what they truly believe to be true.

Screw what you hear. Believe what you see

Love Always,

Chris Rowe

PS:  Check out the other article I just wrote "These Words Mean NOTHING in the Stock Market".

FREE e-Letter
Sign Up

Archives