Your Emotions Can Cost You Money

[Like2Plan]

Your Emotions Can Cost You Money-
Here is a link to the article from Money Magazine (Sep2011):
How your emotions can cost you money

I love this article. Here are a couple of quotes:

So just take a deep breath before making a big money decision?
Not exactly. Often the problem isn't that we're too emotional. It can also be that we're unemotional now and don't appreciate how emotional we're going to be in the future. I call this an empathy gap -- we don't fully empathize with our future selves.

Does the empathy gap affect savings decisions?
The empathy gap tends to promote undersaving because we can't imagine either the pleasures of an affluent retirement or the pains of a lean one. Many investment firms have expended time and effort trying to figure out how to help investors imagine how they'll feel in retirement....

Layaway for Christmas seems to be the big topic in the news lately. I'll use Walmart as an example. Here is a link to the layaway rules: Walmart Layaway rules
There is a $5 service charge to make a layaway. ( There is also a $10.00 cancelation fee if you cancel or if you don't pick up your order by 16 Dec. )

What if folks could empathize with their future selves--say in Jan or Feb and save in order to have the cash available in OCT (or whenever) to buy the gifts and not have to pay layaway fees and still pay cash?

I believe this translates across many aspects of life--not only money.

[mcfroggin]

My article written on the subject is both better and written earlier.

RichAsChocolate.com: Behavioral Economics

[jpg7n16]

Originally Posted by Like2Plan

I love this article.

Be careful. I've heard that your emotions can cost you money.

[Like2Plan]

Originally Posted by mcfroggin

My article written on the subject is both better and written earlier.

RichAsChocolate.com: Behavioral Economics

Your article is good, too. The angle I particulary appreciate is empathizing with one's future self.

The trick is finding a tool that will help folks to accurately model how they will feel in the future when a certain event happens.

[Like2Plan]

Originally Posted by jpg7n16

Be careful. I've heard that your emotions can cost you money.

LOL

[Lexie11]

Hi all, Honestly talking, I am on my way to conquer my emotion. Still learning by doing..

Here are some tips I gathered from various sources
You can begin by making use of stop loss and taking profit prices to reign in your trade. What this does is give you the opportunity to place the trade and halt any deals with it. The overall effect is experience, for the more you deal with a trade, the more it becomes engrained in your mind.
Once you have placed a stop loss, walk away. Do not wait to see how the trade turns out. Most traders place a stop loss and then wait around to see what happens. It beats the whole point of stop loss in the first place. Being there means you are planning to interfere with trading midway, and you don’t want to do that. So walk away!
Another tactic is to employ low leverages. Super high leverages may seem attractive because of the higher profits, but be careful because they carry the potential for heavy losses as well. Plus if in such a situation, the uncertainty that comes with it can lead to trading anxiety, and subsequently poor trading decisions. So keep the leverages low until such a time when you are confident you have the psychological control necessary for high leverages.
Make use of proven methods of trading, those you are sure about. There is nothing as dangerous in trading as using a method you are not sure of. Proper and efficient trading methods help you relax and stay a bit calmer, as the uncertainty is somehow eradicated.