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Sadness

Sadness is an emotion brought about by unpleasant,often difficult events such as loss, failure or personal crises. We have all experienced sadness in our lives at some point. We know that it goes hand in hand with feeling demotivated,helpless and pessimistic and we know that its paralytic power often renders us completely indecisive and stagnant. In trading, sadness is usually related to a loss, a significant error or an unsuccessful trading period in general.

Sadness in trading

It is no surprise that sadness and disappointment have an adverse effect on financial decisions. When we are sad we are more likely to look for instant gratification, thus making impulsive decisions, ignoring greater long term benefits that we could gain if we were patient enough to wait.

In trading , when we are sad and disappointed, we want to snap out of this unpleasant state.As with all difficult feelings, we want to get rid of it, avoid it, eliminate it. We want to see a return, get a reward, make back the money we lost and we are impatient about getting there fast. Our internal energy is too depleted and we cannot wait any longer. So we take the trade. Most often, we don’t take the right trade, we take a gamble. Feeling good is what’s more important now. Restoring our injured confidence, our fading hope.

 

When feeling sad, risk taking is increased. We trade more, taking trades out of our trade and risk management plan, hoping to shift our emotional state from negative to positive.