Have you ever heard of the “Beaten Monkey” Syndrome? Nearly everybody on the planet is in some way, shape, or form affected by this syndrome, and most don’t even know it.
Basically, the theory is that a monkey (or a dog, or another animal of higher intelligence) that is mistreated, physically or emotionally, will cling more tightly to its captors/tormentors. Scientific studies have been done to support this hypothesis.
This syndrome has been used to explain why women (or men) in abusive relationships will defend their abusive partners, will cling to them despite the abuse. People often wonder why a women who has obvious signs of physical abuse will stay with the abusive partner. Beaten Monkey Syndrome is the reason.
So what does this have to do with trading? Read on.
Many Traders are “Beaten Monkey” traders. They are routinely knocked around, tormented, tortured, and otherwise abused by the Markets. And yet they continue to cling to their same trading methods and strategies.
Why would they do this? Well, why does a beaten monkey cling to its captor? Its a matter of psychology – for whatever reason, when abuse occurs, it causes a reaction in some people’s brains that causes them to attach themselves to what is administering the abuse.
So when some traders are abused by the Markets, when their trading system or strategies continues to result in losses, it does nothing but make them cling more tightly to their trading methods and practices.
And they continue to cling to the abusive Markets until they have lost ALL of their risk capital.
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