Bad Habits in investing

Bad Habits in investing

5 March 2020         Queenie Wu

1.      Emotion driven

Too emotional to make investment decisions.  We are being affected by our own emotion every day.  Sometimes too pessimistic, sometimes too optimistic toward the market movement…….   Sometimes wrong decisions may be resulted

2.      Risk averse

It is really difficult to strive a balance between risk and return.  High risk implies high return.  We are greedy but we don’t want to accept risk.   Sometimes I am too hesitate to enter the market.  How to maximize our return under the risk constraint?

3.      Poor market timing

After setting my strategies on forex investing, it is really difficult to implement my whole plan.  Sometimes, we missed the chance as we cannot monitor the market all day long.  

4.      Impatience

It is difficult for me to have enormous patience to wait.  We have to wait until the candle finished.  We have to wait for the strength of the candles faded.  We have to wait the reversal signal to be confirmed.  We have to wait endless hours during wrong decision….

5.      Insufficient market research

Too lazy to check all the news and do the market research before all investment decisions….

How to stick to our investment plan without emotional influence?

Possible solutions:

We have to set our strategic investment plan in advance and stick to it.  I am trying to put my strategies in an EA.  I am still in the process of testing the iCustom EA in which I can attach some custom indicators for forex trading.  I have found different indicators and trying to test each of them.  Currently, this is the only possible solution that I can think of to ensure we have the discipline required to stick to our investment plan.  On the one hand, robot trading may handle the problem of discipline, emotion and market timing, on the other hand it may arouse another problem of inflexible investment decisions in the case of sudden adverse market movement, which may lead to the opposite of destructive performance-chasing behavior.  Again, this is another issue of how to strive a balance between human decision and EA decision under risk constraint.  We may not be able to answer this question.  Anyway, let’s spend sometime on the backtesting of the EAs.  Hope I can find one with long lasting good performance - high profit factor and small drawdown percentage.  Let’s work hard together!

 

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