Thread by @team3dstocks

#BearTipOfTheDay:

One of the absolute WORST things that can happen to you as a trader, is to make money after breaking one of ur rules. Why? One of the evolutionary roles of dopamine is not just to give pleasure, it is to REINFORCE the behavior that JUST gave u that pleasure

That's why we get massive dopamine spikes after sex, eating, and winning etc. The brain pumps out dopamine as a way to tell u: whatever u did just now was amazing, keep doing it. It doesnt know u broke a rule, it just knows pleasure & pain. So it incentivizes u to REPEAT that act

So even though u might write in ur little diary "i broke a rule today, i wont do it again", u're lying to urself. it's too late. Since u closed "green", u got a massive "high" out of breaking that rule. Ur brain linked the 2 activities together (breaking the rule & making money)

So now ure trading w/ this false sense of security. This belief that u wont break ur rule again. But few weeks later, u end up in that same shitty situation. Ur rule is to "cut the loss", but the last time u broke that rule, u made money & felt pleasure. So u break the rule again

And sure enough, the market rewards ur bad behavior, and allows u to close "green" again. Meaning more dopamine is released. The bad habit now grows stronger. The market is slowly fattening u up like a pig before slaughter. It is an expert at giving u a false sense of security.

Then one day, a black swan stock pops up. Ur solution? simple, break ur rule again. u think "just another day, i'll break my rule again. it's always worked". and that's the day it doesnt. Blowup time. ALL those "green" days from breaking ur rule are now GONE, in a SINGLE day.

Now u see why i HATE the "green is good" mentality. It killed SO many traders, bc they did EVERYTHING in their power just to close green, EVEN if that meant breakin rules.

Conclusion: Green is good IF U KEPT UR RULES. Id rather keep rules & close RED then break em & close green