Trading emotions

A break from the usual today to reflect on how things ‘feel’ since I changed my trading strategy at the beginning of June.

Before starting this challenge, I was predominantly a PB/dividends trader. I set this up to challenge myself and to force myself to analyse my trading decisions in a different way.

Your emotions i.e.; the way you ‘feel’ about things (or the way you feel in general) has a huge impact on your trading. In the past, I know I’ve been unwilling to let players go from my portfolio because I’ve become attached to them – I picked them out and now I want to hold onto them as they go from strength to strength – even if that’s not always the best approach. I know I’ve also been guilty of chasing losses in the past, or trying to catch rises for fear of missing out.

As traders, we want to remove emotions from the equation as much as possible but, as humans, that’s not always easy.

So how do I feel now? The odd thing to me is the almost complete disconnect I feel from the ‘performance’ and ‘premium’ players in my portfolio. These were my go-to trades in the past but I feel fairly ambivalent about them at the moment. Some of this must be down to the lack of actual football action but the premium holds are racking up dividends at a rather wonderful rate, and yet I still feel a bit ‘meh’ about it all.

It’s the ‘potential’ players who are getting my blood pumping at the moment and I’m finding it hard not to over-trade here. My budget is my budget and I’m determined to stick to the three-way-split for the whole season but I’m fighting a huge temptation to sell off half of the rest of my funds and drop the lot into a batch of unproven 18 year olds. This is a new feeling for me…

So I’m beginning to understand two things a bit better:

  1. Football Index themselves have always avoided talking too much about dividends in their promotional/marketing materials. They’ve said that this concept is harder to grasp and less attractive to potential new users. I used to think that was rubbish but I’m beginning to see why they pitch the platform the way they do.
  2. Finding the next ‘big thing’ must be the best buzz you can have on the platform. Picking someone up for less than a quid and holding them while they become a world-beater really does ‘reward your football knowledge’. It’s exciting – more exciting than winning a few pence every other day.

I think most traders understand that the vast majority of youth won’t make it but even catching a small rise and a bit of early anticipation around a player is a great feeling – and financially rewarding in terms of capital appreciation. So far, the earnings of the ‘potential fund’ has outstripped the other two funds that I hold.

So while I’m not yet ready to plough all of my money into the likes of Greenwood and Brewster, I am seeing the platform in a whole new light. Whether you agree or disagree with me, I’d be curious to hear other traders thoughts on this too.

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