Stock Doc: Trust Your Instincts

It is very easy to let the volatile nature of the markets dictate your emotions. The fast, wild rides up and down are enough to induce a kind of mental motion sickness.

When you experience success with your trading, your confidence remains intact and you can make decisions on future trades without second-guessing yourself.

When a trade or investment goes bad, however, perhaps resulting in a give-back of an entire week's worth of returns, the mind's natural reaction is to create thoughts that trigger fear and worry. You may freeze up, give up for the day, or even worse, begin to doubt your competence as a trader.

I coach a variety of skilled traders and investors who have allowed fear and worry to spill over into their mindsets when slapped in the face by a position gone sour. These top performers have developed what I call behavioral paralysis, a consequence of a fissure in their confidence.

This sudden self-doubt can be an unsettling experience for relatively confident individuals. Trading with this mindset can negatively impact your commitment to those trades. It's like attempting to drive a car with one foot on the gas and the other on the brake.

With this mindset, it is impossible to leverage your trades and make big money. If you have lost big, your comeback will likely be that much more difficult so long as the mental paralysis remains uncorrected.