Why discussing your trades is bad for your trading

Why discussing your trades is bad for your trading

Trading can be a lonely endeavour, particularly when – like many traders these days – you do so from the comfort of your own home. And combined with the growth in the internet and social media over recent years, it is not surprising that a myriad of avenues have emerged where traders can interact and follow other traders discussing their positions in real time – take Stocktwits and Twitter for example.

And who can blame us? Humans are social beings and we naturally seek out ways to interact with others. A large proportion of this interaction with other traders is highly beneficial for our trading. Interaction is not only how ideas are spread, but created in the first place.

Read also: How childhood beliefs are sabotaging your trading potential

However, there is one aspect of this interaction that could be harmful to your success: discussing your open trade positions with others.  

As soon as you start talking about a trading position, your emotional connection to that trade grows and you begin to lose the neutrality of mind needed to manage a position completely unbiased. This is particularly true if you find yourself defending your reasoning to other traders, as it will become much harder to recognise when being in the trade is no longer in your best interest.

You may have heard of the saying: 'Never fall in love with a trading position'. And one of the easiest ways to do this is by not discussing your open trades with others. This doesn't mean you shouldn't keep a full record of all the trades that you take, but leave the review and discussion until after the positions are closed.

I almost ventured down this path myself. In my recent post Why gold could be a buy right now, I talked about the tendency for gold to rally throughout the month of August when I had related positions open. And while I was conscious this was not ideal, I made sure I did not discuss the specific details of any open trades in the article.

So I'm not discouraging you from interacting in websites where traders talk about their specific trades – rather be mindful of the effect this can have on your attachment to the position. In addition, I recommend seeking out places where you can discuss other aspects of trading, such as trading philosophy, trading processes, risk management and trading psychology. While these topics may not seem as sexy as talking about who is trading what, it will definitely be much better for you and your trading over the long run.

What do you think? What experiences can you share about times when you have, or haven't, discussed your open trade positions with others? I'd love to hear from you in the comments below.

 

 

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