Fear and Greed

Fear, fear is my ally
- Darth Maul


Fear is the path to the dark side. Fear leads to anger. Anger leads to hate. Hate leads to suffering. I sense much fear in you
- Master Yoda

Fear and Greed has always been blamed behind every market movement. When the movement is up, it is due to greed. When its a correction, it is fear. Many strategies have also been formed around these emotions - buy when everyone else is fearful, for example is a contrarian strategy.
There have been a lot of talks about the importance of having neither fear nor greed. Total emotionless in trading as emotions clouds our judgment. While this sounds logical, is this truly possible and would it yield a better result?


To know this for sure, today we look into Automated Trading System.
Automated Trading Systems automatically executes signals from any strategy through a broker. It is a software that trades your Trading System for you. Manual entry is no longer necessary. Entry and exit are made at lightning speed, so to speak.

Locally, unfortunately, there is no such software for or use and testing, or so none to the best of my knowledge. However, overseas wise, this development have been for quite some time.

The question remains, is consistent profits from an Automated Trading System possible?
According to a survey (poll) conducted by a leading trading forum, the results are as follows:

Yes - large consistent short term gains - 37%
Yes - slow long term gains - 11%
Possibly but none would sell their system - 24%
No - its a trader's fantasy - 28%

There could be other reasons such as the complexity of programming what the human mind knows into the software. Or some other reasons. However, from the results of the survey, we could see that among the traders, not many of them have generated profits consistently from these Automated Trading Systems.

Therefore, I am inclined to conclude that there exist no evidence that trading without any emotions would yield better results.

Courage is resistance to fear, mastery of fear, not absence of fear.
- Mark Twain

I used to have the fallacy that one should trade without any emotions. However, lately, thanks to Ben of Wisdom Wise, I realised that one need not be a robot to trade. One merely needs emotional control, not emotional absence. Make fear and greed an ally.

If you remembered, I ve posted an excerpt from Wall Street previously - Greed is Good.

Greed and fear - the notorious driver of the stock market.
Make them an ally.
To the end, we re only human.
Master your fear, master your greed, and have the wisdom to know when to be greedy and when to be fearful.