I've managed to build my Interactive Brokers account which I use for trading futures up to $12,000. I originally put $10k into the account. After the Aussie Dollar trading debacle in early December the account had fallen to $7,000. So at this point I am achieving the first part of my second goal for 2007 by bringing one of the three accounts back to profit. As I begin to rebuild profits I start to feel less anxious about losing money in trades. This doesn't make a lot of sense economically. $2000 is about 1/2 per cent of my net worth and shouldn't make much difference to my decision making if I was really a neoclassical rational optimiser. It shouldn't matter that the $2000 is the profits in a specific account. This is a classic example of behavioral economics.
Anyway, I'm not sure if this is good or bad. On the one hand, I am likely to be less jittery and more likely to let profits run etc. On the other hand, I might start to take unreasonable risks. Need to remain dsciplined.
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