Dull market.

The market was really dull yesterday. Regional markets was down due to the poor performance of DJIA on Friday, and KLCI was down 13.36 points to close at 1233.43, volume traded was only 355 million shares, one of the lowest volume day in recent months. This indicates a lack of interest. External factors and internal political uncertainties will continue to affect the performance of the KLCI. CI may continue to go sideway within the range of 1200 - 1265, if 1215 is broken CI may go further down to test 1200.

In a dull market like this, perhaps this is the best time to do more reading to enrich ourself. Below is a good article by Michael S. Shopshire, PhD, of Mental Edge.

The Obsessive Compulsive Trader

Careful analysis of all possible alternatives and all possible consequences of one's decisions is the hallmark of good decision-making. Amateur traders approach their decisions like recreational gamblers, but professional traders make a careful analysis of their options and act decisively. It's important to avoid impulsive decisions. It's vital to have a clearly defined trading plan, and to manage risk so that a single trade or series of trades will not have the potential to completely wipe out your trading account. It's also imperative when making a trading plan to define up front the signs and signals that indicate your trading plan has gone awry. It's useful to conduct a thorough analysis before making a decision, but some traders have difficulty making prudent decisions. Rather than act decisively, they become completely paralyzed by it.

At the outset, it's vital to point out that not all traders suffer from psychological ailments. When it comes to hesitation, for example, some traders have good reasons for waiting. Experience may have shown that it was worth waiting before making a trade, or novice traders may be risking too much capital on a trade and be legitimately afraid of digging themselves into a deep financial hole. That said, other traders act like they have obsessive-compulsive personality disorder. In other words, they hesitate too long and the reasons for their hesitation reflect personality characteristics.

Traders with a pathological variant of what traders usually refer to as analysis-paralysis are afflicted with an insatiable need to seek out certainty and security. For these individuals, uncertainty represents insecurity. It's not merely that they have a pessimistic outlook, although they have one. They equate money with psychological security; losing money represents not only a loss of financial security, but also a loss of basic emotional security and well being. How does such an affliction develop? For many it is rooted in early childhood. Parents often impose rules for their children to follow and punish them when the rules are broken. Young children are on the lookout for what rules to follow so as to avoid punishment and the unpleasant feelings associated with it. As adults, we make our own rules and decide to follow them or not; we no longer act as children searching for the "right" rules to follow in order to avoid punishment. People with extreme analysis paralysis, in contrast, tend to search for the "right rules." They continuously search for rules to follow, and when no clear rules exist, they simply make them up. It's as if their parents have followed them into adulthood. They are always there next to them nagging and threatening punishment when the "right" rules are not identified and followed unconditionally. For traders with a pathological variant of analysis-paralysis, this past childhood conflict manifests itself as searching for the "right" indicator or the "right" trade setup. And even when they see it, they have a strong need to want everything to be perfect. Because if they don't, they are certain that some form of unspecified punishment will follow.

Do you have an extreme form of analysis-paralysis? If you do have a pathological form of analysis paralysis, it may be difficult to overcome, but it is not impossible. The main thing is to take realistic action. If have a dire need to be perfect, you may want to minimize risk so that you can convince yourself that you can handle the worst-case scenario. Taking big risks will drive you to obsess about possible “disasters.”

Don’t be such a perfectionist. It’s not as bad to make mistakes as you think it is. "The harder you strive for perfectionism, the worse your disappointment will become," according to Dr. David Burns. Perfectionism has more disadvantages than advantages. Trading is a profession where you must take risks and explore new market opportunities. If you continuously strive for perfectionism, you'll never feel satisfied. You'll always think, "I could have done better."

Based on theories of Dr. Albert Ellis, a more adaptive approach is to realize that it's impossible as a trader to be thoroughly competent, adequate, and achieving all the time. Certainly, you should develop an extremely detailed trading plan and try to account for all adverse events that may go against your plan, but there are limits to what you can do. For your long term enduring success, it is vital that you learn to ease up. You don't have to be perfect. You are bound to make mistakes occasionally. Dr. Burns suggests that lowering your personal standards may be helpful. Rather than strive for high levels of performance, feel what it is like to be average. For example, instead of searching for the ideal setup, you may want to just find a profitable setup. You may not make as much profit, but you will feel more relaxed. If you compare what it feels like to strive for high standards, moderate standards, and low standards, you may find that merely going for moderate standards makes you feel better. You may also find that you put on more trades, and achieve greater levels of profitability. You may also want to change your self-talk. In her book, Overcoming the 7 Deadly Sins of Trading, Ruth Barrons Roosevelt lists some supportive beliefs that may help you control your need for extreme perfectionism: "I do my best and my best is enough. Trading is an imperfect art and science. The future is unknowable, so I don't have to accurately predict it. I can forgive myself and still improve."

Don’t let an extreme form of analysis paralysis get the better of you: Ease up. Remember, you don't have to be perfect. You are bound to make mistakes occasionally, and that’s all right. No one is perfect. A mistake does not mean that you should be punished, it just means that you are human.