Shiny Penny Syndrome in Stock Markets – How to Get Rid of it?

Shiny Penny Syndrome in stock markets is getting common day by day. Don’t worry, it’s not a health condition but definitely something that needs to be cured. Let’s find out what it is and how to overcome this syndrome.

What is Shiny Penny Syndrome in Stock Markets?

Let me illustrate it with an example:

Mr. X found a trading strategy in an online discussion board that looks very promising. The backtest result, equity curve, and CAGR are unbelievable!

Without giving any second thoughts he started trading based on this system, and yes it worked for him.

A week passed and he found another trading system from a different source and the profitability of this new system is even better. MR. X immediately discarded his old system and switched to this new one.

And this cycle continues over and over!

Shiny Penny Syndrome in stock markets

Does this situation sound familiar to you?

If yes, then you are also suffering from Shiny Penny Syndrome!

Don’t worry, it’s not a disease, it is a state of mind that is curable.

By definition, “Shiny Penny Syndrome is the constant jumping of attention and focus, from one new thing to the next, leading to distraction and loss of direction

Mr. X, moving from one system to another in the search of “the perfect system” is an ultimate example of this syndrome.

Also Read: Why should you avoid Trading on News?

How to get rid of Shiny Penny Syndrome?

Every new trader will suffer from shiny penny syndrome during his starting days, there is no denial to that. For a person entering the markets, everything looks rosy for the first few months, and that’s when he/she starts to chase numerous things at once.

This chase is driven by greed. If you find a system that produces 5% net returns in a day, you’ll look out for something that gives 10% returns, and this chase never stops!

The cure to this syndrome lies in your mind itself. Below are the 3 things we recommend:

  1. Stick to one strategy and don’t look at anything else until you are fully convinced that your strategy is not working.
  2. Stay away from unwanted distractions. Do not follow numerous experts, blogs, or forums. Believe in the one which you think is the best.
  3. Think scientifically and try to understand the technical details behind the system. Do Not follow any system blindly without knowing what it actually does.

In a nutshell, Shiny Penny Syndrome is something that happens to all and is pretty much unavoidable. However, with experience and maturity, you’ll slowly eliminate it and that’s when the real journey begins!

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