I have been trading for 5 weeks already. It is very easy to experience the battle between emotion and reason. And many times I have given in to my emotions. Since the stock market is fractal, I believe that the following adage by warren buffet works in both short term and long term investing:
“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.”
Easily said than done, a great deal self-control and courage is required. In addition, it is easy to be overly self-controlling (sell off a winner) or overly courageous (buy into a loser). Human emotions are conditioned by evolution to react to the most recent changes, therefore following price too closely has a negative influence on rational decision making. However, not following the price close enough makes us slow to adapt to new changes in the business and investment landscape.