TJ 114: Andrew Sather and removing emotion from trading

Andrew Sather is a co-founder of the Money Tree Investing podcast and the creator of the value trap indicator to aid in trading without emotion. He knows that trading emotionally is dangerous; you'll likely go after risky trades and positions you might not otherwise. Setting your own trading rules and indicators like Andrew's above and following them is crucial when trading. The benefit is two fold: they automate finding trades to a degree, and protect you from trading emotionally. When scanning for new trades, you've already done the heavy thinking by creating your rules. Compare the position you're interested in trading and if it fits, great; place the trade. If not, move on without a second thought. The second benefit can save your account from suffering painful drawdowns. When trading without a ruleset and indicators to guide you, upswings and downswings can get to you. After closing big winning trades, you'll start to feel invincible and start chasing big payoff trades that are a lot riskier than you normally would. On the flip side of the coin, if you've suffered a few drawdowns in a row, you'll start wanting to make up all your losses in one or two big trades to end the day up or at least neutral. Odds are in both of those scenarios, you lose and have a drawdown for not following your trading rules. In this episode, Tim and Phil talk with Andrew about trading around the twin motivators of the market - fear and greed - and capitalizing on opportunities you may otherwise miss out on were those motivators to be dominant in your trading.