First, you start out with the fact that all incoming information of markets amounts to an ambiguous soup. In other words, no matter what you do, you can’t escape the ambient uncertainty… yet many researchers and thinkers (Keynes and Ellsberg for two) have shown that we shy away from ambiguity and uncertainty…
Next, when you get in the market, your position either starts to work – or it doesn’t. The latter is actually easier – a loss is a loss and you know it. Oh sure maybe it will turn around but… it is clear. And of course, it doesn’t feel that great.
Relatively however it generally feels better than a winner. WHAT? you say?
Well think about it – when a position starts to work you are faced with an impossible decision scenario – wait for more but risk reversal, get out now but risk not getting more …or put a trailing stop – which means by definition you will get less than you could have had.
None of us can change the fundamental uncertainty of trading – no matter how many clever combo’s we put on our charts and no matter how many experts we work with. So to give yourself the psychological leverage that can set you apart … get used to the anxiety of ambiguity. (see posts below for some help).
To learn how to handle the very real frustration and disappointment of winners – expect it. Winning is going to tap into “anticipated regret” or more properly stated – the avoidance of anticipated regret. But the bottom line… the vagaries of the market induce regret almost no matter which way you turn.
If you know that going in, you have an edge vis a vis those who don’t. And what percentage of those you are trading against do you suppose do not know – or accept – this? … See… there you go.