Trading Psychology: The importance of reflecting on your mistakes.
We are aware of greed and fear when we talk about trading. Gordon Gecko said the famous movie quote line "greed is good" in Wall Street the movie. But what exactly greed and fear mean and how does it affect our trading psychology.

Well, this past week was a perfect example of these emotions playing out for me. Luckily, I was able to spot these emotions, correct them, and profit $1,600 from this initial mistake.

If you're interested in the making money in the markets, you will know how important trading psychology is to your account. This past week was the perfect example of that.

This past week, the Fed Chair Janet Yellen opened her mouth on Tuesday. Now this is different from the typical Wednesday 2pm Fed announcement on interest rates policy -- this was more just a speech she made on a Tuesday.

Still, it had drastic implications on the market.

But before we get to the Fed speech, let's talk about trading psychology.
Trading Psychology: Greed and fear.
Greed for more money.

But fear of what?

Usually it's fear of losing money. But in this past week, it was fear of missing out.

You see, every chartist and chart technician was calling for a massive crash this past week -- and for good reason. The market had already rallied from 1800 all the way over 2000 and we got to 2047 -- that's almost 250 points of pretty much nonstop rallying. A lot of fund managers and technicians were calling for a top -- shorting heavily.

And for a day and a half, things went their way. The market drifted lower and lower for a full day -- and even overnight, it could not even get a slight bump on the upside. Everything was down.

Maybe all the bears were right this time. I haven't seen such continued downside in a while. Maybe that WAS the top.

Everybody who was short the market -- if they were right and we were going down big -- then they would stand to make A TON of money.

Already, people were messaging me talking about how much money they made.

And I thought, I can't miss out on this opportunity of a lifetime to short and make it a big--a big short.

So I went short -- even though I could not clearly understand the structure of the wave pattern.

you see, I was going against my own rules of only trading if I clearly see a wave structure.

Instead, I was entering a trade because of my emotion - in this case fear of missing out.

Of course, when I entered this trade, I did not know this was a fear of missing out.

Oftentimes, when you're into what you're doing, you won't see things from an outside perspective.

And this is where it helps to talk with someone else.

In my case, I had my daily walk with my fiancee around the lake - and we talked about the mistake I had made.

Why did I make this mistake?

After talking it through -- she helped me spot my mistake. My mistake wasn't necessarily that I went short -- although that's how the mistake manifested itself. The real mistake was that I fell into the trap of having a fear of missing out.

A fear of missing out on money that everybody else was about to make and that I wouldn't make if I didn't jump in.

But I'm a wave pattern trader -- I only trade on recognizable wave patterns. Once I start trading based on fear of missing out -- I'll start to lose money in the long run -- even if this one works out.

In this case, this short did not work out.

I was down 10 E-mini S&P points and decided to exit this trade.

I wrote extensively about this mistake on my blog - LifeStyleTrading101.com -- and some readers even commended me for sticking out my neck and talking about it.

As you may know, a lot of people in this stock market industry are really shady. They will make money, but when they lose money, they won't tell anyone. I try to be as transparent as I can with my mistake so we can all learn from it.

I looked really carefully at the wave structure of that pattern an...