Today’s Lesson: Compartmentalization (a mouthful of a word but the best I could find for this topic).
Here’s the setup: you have a 401-K (long only) and you trade short term for income (long and short). Every morning you go through your routine which includes assessing two time horizons:
Do you see the challenge? For your bigger account you WANT the market to continue higher. For your trading account you’re willing to trade short, AGAINST what you really WANT.
You may not realize but you could have a confidence issue with your short-term trading. You’re in conflict. Heck, in a Bear Market your confidence issue switches to your investment account!
Think about this while trading short. If you have any angst then knowing the cause (your WANT) is the first step to “recovery.” Compartmentalize your feelings. Don’t think about your long-term account while trading short-term. With practice this confidence-killer fades away.
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