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Hirschhorn: Staying Objective

Monday, 27 Apr 2009 | 4:00 PM ET

Objectivity is as important in investing as it is in life. That's especially true when it comes to trading, says market coach Doug Hirschhorn.

Hirschhorn: Objective Trading
Market coach Doug Hirschhorn gives traders advice on trading without emotion and taking a more objective approach.

Video: Market Coach Doug Hirschhorn discusses strategies to remain objective when trading.

In fact, most traders lose money, he says, because they lose objectivity in their trades. They anchor to a particular price or trade to be right rather than make money. Even worse, they trade for revenge or over trade because they're afraid they'll miss out.

The key to overcoming these destructive trading behaviors is to stay objective.

To throw emotion from the mix, ask one simple question: “If I did not have this trade on right now, what would I do?”

In other words,

  • It doesn’t matter where you are long or short from
  • It doesn’t matter how much you’re up or down
  • It doesn’t matter what other traders are doing

The market does not know so don’t make your trading decisions based on that information either.

All that matters is what is the market telling you right now.

If you can consistently implement that strategy, you are well on your way to staying objective in your trading decisions.

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Doug Hirschhorn is the chief executive officer of Edge Consulting, a firm specializing in “Peak Performance Coaching.” He holds a Ph.D. in Psychology with a specialization in sport psychology, and has offices in New York and South Florida. His client list includes elite athletes as well as many of the largest banks, hedge funds and financial institutions in the world. Doug is presently at work on his new book, 8 Ways to Great (Putnam, 2010).

Have a question for Doug? You can reach him through his Web site, DrDoug.com

Disclaimer: Doug Hirschhorn's expertise is in the psychology of achieving peak performance. He is not a financial advisor and does not make trading or investment recommendations or provide trading or investment advice. He is an expert on the mental game. Although Doug Hirschhorn has a Ph.D. in Psychology with a specialization in sport psychology, he is not a licensed psychologist and does not provide therapeutic, clinical or counseling services.

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