I have upload some of the previous articles. I have arrange them accordingly to their category.

Trading psychology provide some nice insight of human behavior in trading. It also show us how the emotion will affect the trades. 30% of the trade is determine by the skill but 70% is determine by the state/emotion of the trader.

Options provide some interesting articles.  Myths of option will be covered and what is an option and many more. Everything that you need to know as a newbies about option will be there.

Online Brokerage shows us 3 different kind of brokerage. The different between IB, OX and TOS. Please take a look at it before you decide which platform is more suitable for you.

There will be more stuff being upload for the next few days. So keep a look out at it. It is a good time to read through again for whatever stuff that you guys have miss out.  I will leave out all the daily trades post as i find it quite meaningless. I will post the big trades that i learn most from it. Meanwhile please enjoy the new layout and the articles and post that i have uploaded.

I’m glad that a lot of people has step up the security of their blog. Through my incident quite a lot of people has been backup their materials.

I’m looking forward to write good stuff for you guys.

Cheers,

Akalawoo

Usually …

A call buyer wants the stock to go up.
A put buyer wants the stock to go down.

A call seller wants the stock to go down.
A put seller wants the stock to go up.

But …

A call buyer wants the stock to go down.
A put buyer wants the stock to go up.

A call seller wants the stock to go up.
A put seller wants the stock to go down.

The above statements are not wrong because this is only a part of the picture that you see. A call buyer wants the stock to go down because the buyer buy a call to protect his short selling stock. Option is just like an insurance policy. People buy insurance to protect the house, health and other stuff. Option is the same thing. Option is also use to protect the stock.

Just to take note that the call buyer not necessary want the stock to go up. It really boil down to personal strategy.

Myth 1:
Selling options is the only way to make money since 90% of options expire worthless.

FACT:
Contrary to what many think, the vast majority of options do not expire worthless. The facts are as follows: approximately 10% of options are exercised, from 55% to 60% of option positions are closed prior to expiration, and about 30% to 35% of options expire worthless. Note that 90% of options go unexercised, which is very different than expiring worthless. It should also be noted that this says nothing about profitability. Option positions closed prior to expiration may be profitable or unprofitable. Options that expire worthless may not be unprofitable if they were part of a strategy that involved other securities such as covered call writing.
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Myth 2:
You should only buy low-priced(cheap) options to limit your risk.

FACT:
It is a fact that purchasing options is a limited-risk strategy: The most the buyer of an option can lose is the amount paid for the premium plus commissions. Another way to look at this is that the buyer of an option has less capital at risk than the equivalent position in the underlying asset. What is more important to focus on than the inherent leverage in options is the probability of gain or loss. Low-priced options tend to be short-term and out-of-the-money. These are the options with the very highest probability of expiring worthless. The options toolbox software, available without cost at www.cboe.com/toolbox, allows investors to evaluate these outcomes and probabilities prior to trading.
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Myth 3:
When I buy an option I am taking the risk that whoever sold me the option may not be around when I want to sell or exercise this option.

FACT:
The financial condition of the buyer or sellers of option contracts is not a matter of concern for investors. The counterparty to every option transaction is the Options Clearing Corporation or OCC, which guarantees the performance of the terms of listed option contracts. Should a party default on an option trade the OCC would ultimately make good on those contracts. The OCC has been given an AAA credit rating–the highest rating given by Standard & Poor’s Corporation.
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Myth 4:
Nobody exercises an option before expiration, and so the risk of being assigned early is virtually nonexistent.

FACT:
Although only approximately 10% of options are actually exercised, and the majority of those are exercised very close to the expiration date, a number of options are exercised prior to expiration. In fact, in-the-money equity call options will at times be exercised before expiration just prior to the stock going ex-dividend. The holder of an equity call option may exercise early to capture the dividend that would be foregone if the option were only exercised at expiration. For equity call options, the risk of early exercise is greater immediately prior to the underlying stock going ex-dividend. Equity put options are also occasionally exercised early. Early exercise of puts tends to occur when in-the-money puts are trading near parity (at their intrinsic value, no time premium left). Investors must remember that puts have a tendency to go to parity more readily than calls. So for put options, if the time premium has completely eroded, the risk of early assignment must definitely be taken into account.
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Myth 5:
By their nature options are short-term instruments and forecasting short-term price movements is nearly impossible.

FACT:
Numerous investors prefer to trade shorter-term options. But if someone has a different time frame in mind, the options market may still be able to meet his or her investment needs. In fact, for all optionable stocks, options with expiration dates of six to eight months are listed for trading. For a more limited group of stocks (the ones with the more active and liquid options), longer-dated options, known as LEAPS, are also listed for trading. LEAPS give investors the possibility of establishing option positions of anywhere from nine to a maximum of 32 months. So if your outlook is based on longer-term forecasts, LEAPS may provide you with the leverage and limited risk similar to short-term options.
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Myth 6:
The best way to play a volatile stock is to buy call options, put options, or even both.

FACT:
Buying options is not necessarily the best way to profit from a volatile stock. Investors must keep in mind that options will be priced according to the volatility of the underlying stock. Generally, a relatively stable, low-volatility stock will have relatively inexpensive options; a more volatile stock will have much more expensive options due to the greater uncertainty about future stock prices. The stocks historic volatility will be taken into account in the options’ pricing. Investors buying options to take advantage of a volatile stock must remember that the options market has taken this fact into account also. The resulting option prices will usually include a premium for that historic volatility. If the underlying stock does not behave in the future with as much price volatility as expected, this “volatility premium” in the options prices will erode, sometimes dramatically.
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Myth 7:
Options are a zero-sum game: in order to make money, the trader on the floor who bought or sold an option has to lose for me to make money.

FACT:
Very often when investors purchase options, they do so from a professional option trader (a market maker) who thereby becomes the seller of the option, and vice versa when an investors sell options. It stands to reason that if the buyer of the option (i.e. the investor) is to make money, the seller of this same option (i.e. the market maker) must lose a corresponding amount. It appears as though public investors are in competition with the pros, and would therefore make no sense to argue with experienced, savvy market makers. In fact, the public and market makers are not in competition with one another. The investor who purchases an option usually does so because he or she has an opinion about direction: Call buyers are bullish, put buyers are bearish. Investors purposefully establish positions with a directional bias. When market makers sell or purchase options, it is usually because a public customer wants to buy or sell an option; market makers may have no opinion about the probable direction of a stock. What do they do? In the best of all possible worlds, a market maker who sold an option at 2 would try to buy it back at 1-7/8, make a small profit and have no market exposure. In most real-world cases, a market maker who sells an option may not be able to buy it back quickly at a profit. What happens then, wait and hope the stock goes in the right direction? For most market makers a wait and hope strategy would be a recipe for disaster. Instead, they will hedge their positions, either by buying or selling a different option, or many times by buying or selling the underlying stock or security. It turns out that investors and market makers are not competing against one another: investors are trading a directional opinion, while market makers are hedging their positions and trying to lock in small profits due to small price fluctuations in a series of options and the underlying security.

Article by CBOE

Have you wonder what are options?

Do you know that Options is a tool create to trade stocks especially for those expensive stocks.

Definition: An option contract is an agreement between two parties to buy/sell an asset (stock or futures contract as an example) at a fixed price and fixed date in the future.

It is called an option because the buyer is not obliged to carry out the transaction. If, over the life of the contract, the asset value decreases, the buyer can simply elect not to exercise his/her right to buy/sell the asset.

There are two types of option contracts - Call options and Put options.
A Call option gives the buyer the right to buy the underlying asset, while a Put option gives the buyer the right to sell the underlying asset.

American options can be exercised anytime between the date of purchase and the expiration date. European options may only be redeemed at the expiration date. Most exchange-traded stock options are American.

A simple example: lawrence buys a Call option contract from Sarah. The contract states that lawrence will buy 100 Microsoft shares from Sarah on the 5th May for $25. The current share price for Microsoft is $30.

Note: this is an example of a Call option as it gives lawrence the right to buy the underlying asset.

If the share price of Microsoft is trading above $25 on the 5th May, then lawrence will exercise the option and Sarah will have to sell him Microsoft shares for $25. With Microsoft trading anywhere above $25 lawrence can make an instant profit by taking the shares from Sarah at the agreed price of $25 and then selling the shares on the open market for whatever the current share price is and making a profit.

The $25 value, which is stated in the agreement, is referred to as the Exercise (or Strike) Price. This is the price at which the asset will be exchanged.

The date (in this case 5th May) is known as the Expiry (or Maturity) Date. This date is the deadline for the option contract. At this date, the option buyer is to decide if a transaction of the underlying asset is to occur.

Outcomes: Let’s imagine that at the expiration date, Microsoft is trading at $30, then lawrence will buy the shares from Sarah at the agreed $25 and then he can sell them back on the open market for $30 and make an instant $5.

Alternatively, if Microsoft is trading at $20, then buying the shares from Sarah at $25 is too expensive as he can buy them on the open market for $20 and save $5. In this situation, lawrence would choose not to exercise his right to buy the shares and let the options contract expire worthless. His only loss would be the amount that he paid to Sarah when he bought the contract, which is called the Option Premium - more on that a little later. Sarah would, however, keep the option premium received from lawrence as her profit.

In the real world of exchange traded options, transactions don’t really take place between two people like I’ve explained above. The process of Novation actually removes the identity of who is on the other side of the trade. You simply Buy or Sell an option contract from the exchange without knowing who is on the other side.

Have you ever lost money trading options before, or has someone told you that options are a losing game? That is probably because the methods being used to trade options were faulty or overly simplified. My mentor Conrad identified the follow 6 reason why the majority of option players fail to make money.

1 Inappropriate selection methods

Selecting the right stock (and the best corresponding option) is the first step in successful option trading. Some option traders will take a situation they just read about in the news as an option play. Others tend to look at longer-term measures like a stock’s valuation as an indication of its short-term potential. This mismatching of time frames is one of the biggest mistakes made by those who trade options. My staff and I sort through the entire universe of stocks with listed options, in order to pinpoint only those situations that look most attractive for sharp movements. The Option Advisor uses a methodology based on not one, but all of the key short term factors that drive stock prices — technical, fundamental, and sentiment.

2 Betting against trends
Trends in prices, whether up or down, have a tendency to last longer than people expect. Most traders lose the bulk of their money betting against trends. I’ve specifically developed my indicators to tell me not only the nature of the trend, but also the investing public’s view of the current trend. What I’ve found is that a prevailing disbelief of an existing trend gives a confirmation that the trend will continue, since there’s money on the sidelines that will eventually be convinced to buy into the trend before it ends. Thus, my approach in buying options with the trend allows you to trade on the right side of the market.

3 Inability to take a loss
Sure, everybody loves to hear about gains and profits, as this is what we all seek to achieve. While “loss” has negative emotions attached to it, the key is not to be emotional in trading, but rather to stay objective in all trading decisions. If the market is not validating my analysis, I have specific exit rules that get my subscribers out of option purchases before their expiration, so that big losses are often avoidable and capital can be preserved for future trades that are likely to be more profitable.

4 Lack of discipline

Many option traders fail because even when they do have gains, they let them slip away by not knowing when to get out and take a profit. Often, you should be taking a profit when the position is moving most obviously in your favor. What I’ve been able to teach option traders is that a mechanical system for entry and exit prices must be in place before the trade is initiated. I pre-determine the highest price that should be paid to enter the option, and the subsequent price that, when reached, will automatically force profits to be taken. This allows traders to prevent profits from slipping away, and enforces the discipline necessary in any successful trading approach.

5 Poor money management

Every smart option trader knows that even with a winning approach, money management is crucial in building an account’s value. The primary consideration is how much to invest in each trade every month. Often, amateur option players come into the business and make some nice gains right off the bat. Then, thinking this is a simple way to riches, they let all their capital (including all their profits) ride on a subsequent trade that wipes them out. Then they vow to never trade options again. The answer here is to first know the rules of the options game: there is great upside on winning trades, while you can also lose all of your investment in a particular option trade. Clearly no matter how good your approach, you will never win 100 percent of the time, and you should not allocate all (or even the majority) of your trading capital to any particular trade. How much do you invest? Each month, I tell Option Adviser subscribers how much of each portfolio’s cash reserves to devote to the recommendations in a particular newsletter.

6 Consensus thinking

Amateur traders tend to bet with consensus thinking, which is a sure way to lose in option trading over time. Whether it’s an article in a national publication, a hyped new product or a “tip” you’re betting on, Wall Street has a way of already discounting such news before it becomes widely disseminated. By that time, smart traders are looking for opportunities to bet opposite from the conventional wisdom. I’ve learned that you can use options very successfully in contrarian bets. Understand that a contrarian does not always “zig” when other say “zag,” but rather looks for extreme viewpoints that are apt to spotlight the key turning points in stock prices. That’s what defines true contrarians, and that’s a major reason why I’ve been so successful for those who subscribe to the Option Adviser.

By Conrad - (My mentor)

I didn’t trade yesterday because i’m just cautious about the fed stuff. Fed will always give you a surprise. I went to sleep and wake up at 4am Singapore time. I saw the puke of the market but decide not to trade as i was very sleepy.

Trading has to do a lot with yourself. Trading is not about the market.

You have to get your emotion and psychology right before you go to trade. Without the good emotion or feeling of the day, you will be most likely be losing during that day.

Do Not Trade, If …
- You cannot afford to lose the money. (Prepare to lose)
- You have a Bad day (quarrel with wife/child/boss).
- You are Sleepy
- You are Not comfortable in trading
- Technology failed You

Do not be afraid that you will lose the opportunity for the ride up or down. There are plenty of opportunity out there in the market everyday.

Remember: If you trade, you will lose money. If you don’t trade, at least you wont lose money.

The funny thing that i found out … People will lose money if they care about their money but people will make money if they don’t care about the money.
Get yourself right first and the money will come to you.

The author - Lawrence (akalawoo)

The FEAR that i encounter during the trade
- I fear that my winning trade will become a losing trade
- I fear that my losing trade will not be able to become winning trade

During Off-trading
- I fear that the market will turn against me
- I fear that i wont be able to make it back home on the opening of market.

The Measure that I take to COUNTER the FEAR
- Stick to my plan and strategy
- Have my Target profit and Stop lost
- Practice and practice
- Look at the indicators
- Automate it

Conrad
I fear my own Powers of Attraction!
So I am not going to read this post again before I start trading!
Seriously, my deepest but not the only fear is that my pride could be ruling my head without me realizing it until its too late. Its not easy being a coach and admitting you’ve made a mistake. So pride tends to rule in situations like those.

My solution is simple:
Cut Loss. Even if its too late, just cut loss. And then tell everyone that you were an idiot.

Jack

My fear is having too many winning trades in a row, making me think that I am in the fantasy land.
My fear is that I am able to guess where the market goes correctly.
My fear is that I am able to say to myself I am never wrong.
So, the catch is to stick to my own trading systems, and automate the trades.

This is what Tom Gentile says:
1. When you are still looking for the trade, the computer is your employee and you are the boss.
2. But when you are in the trade, the roles reverse. The computer is your boss and you have to be the employee to listen to the computer. Let the trade do what it is supposed to do.

Zand

Well my fear is simply Pride !!!
Staying Humble is a challenge, and I work very hard to stay that way.

Jmot

My earlier fears stems from my trading account. My heart sinks when I know that my trading account is going deeper and deeper into the reds. I used to always look at my trading account as a gauge of my trading performance. I realized that my emotions are tied to my trading account to the extent that it has also influenced my trading decisions and judgment.
Something which I consciously try to avoid doing now. I try to focus on the quality of my trades and try to improve them instead of how they will affect my trading account.
Someone out there share the same experience?

Benard

My fears:
1. Holding on to a position and some trashy news or major unexpected world event happens that causes the market to tank, and I do not have the stop loss in place to take money off the table. The market takes all my profits away.
2. Holding on to a losing position and sweating while it continues to either tank or move sideways.
3. Reporting to my son that I stubbornly held on to a losing trade instead of trading my plan, aka, behaving like an idiot!

My learnings to far:
1. Easy to read and talk about cut loss. Emotionally hard to do as we all want to win. Having done some major cut loss, its now easier. I guess practice makes perfect. If a trade/scalp is not going my way, I will cut loss without hesitation. Yes, it may reverse and go my way later after I cut loss. No matter because it could also go the other way! I’m learning to trade my plan. Easy to read about, talk about, very hard to do.
2. I’m working out my stop loss positions to be activated for my value stocks as well in case I don’t have time to react to market conditions
3. Trade with the trend. If trend reverses against me, I cut loss. Hard to fight the trend, and harder to keep hoping day after day that tomorrow will be better.
4. After cutting loss on a losing position, I feel better, mind feels at ease, feel calmer and can think better. Easy to talk about, hard to do.

Thoughts
These are a few guys that have share their experience in trading. I hope that You will be benefit from these sharing. To know more about the psychology of trading, you can feel free to visit the trading forums - http://www.wealthacademyinvestor.com/forum , or visit my mentor blog Conrad - http://www.conradalvinlim.com/

I hope that there will be more people sharing their thoughts and opinions. Thank you very much for visiting my newly born blog. Have a nice day trading =)

On march 11, i was reading the newspaper. Guess what did i saw? The headline was a guy lost 700k in a months. He lost a lot of money when the market meltdown. He lost a lot as he was hype by the easy money that he make earlier on (80k). Then he managed convince his dad to lend him 300k for him invest. He lost 700k and his long time girl friend of 8 yrs. He only paper trade for a few days.

Lesson learn ….

- Set your account that suit you even in Virtual trade/paper trading . Do not set it 100k when you cant afford to fund it or even stomach so much money
- Formulate your rules and hone your skills
- Stick to your winning rules and keep on study and learn new skill
- Cut loses and never ever invest on credit as your fear will dictate your way cos you cant afford to lose the money
- Learn how to win in a bearish and bullish market then trading will be so fun and enjoyable

Hope all of you have a happy trading experience …
feel sorry for that poor guy …

I chance upon this article by Ryan Jones yesterday while i was researching on options. I find it quite meaningful and some of the sins i do encounter personally. So i hope that you guys will be benefit from this article.

1.Focusing a majority of time on technical analysis and trying to predict price action.

Do you know how many indicators have been created for trading? Approximately two and the both do essentially the same thing. Funny thing is though, there are a million different names for them. 99% of all indicators that are derived from price action do essentially the same thing. Do you know what that is? Most indicators simply tell you where price action is now compared to where it has been in the past.

There is no indicator out there that is derived from price action that will tell you where the market is going to go. Many traders may say that they agree with this, but how they practically apply indicators, and more importantly, by the vast amount of time they spend looking for and/or creating that “perfect” indicators says differently.

There is a time and place for indicators and technical analysis, but don’t waste most of your time trying to get that perfect one. You will be far better off understanding what they are, finding one that you are comfortable with and then spend your time making sure that other areas are being taken care of (i.e. expectations, money management, etc.). Those who system hop looking for that perfect one never spend the time to build a foundation and usually end up losing.

2.Buying short-term, out of the money options.

For a long time, options have been the beginning ground for many, many traders. They were for me. Buy short-term, out of the money options (because they are cheap), and you have the potential of amassing a huge return in a short period of time. Uh huh.
What you have is a fast track to losing money. I could be a little off on this, but there are better odds that you will walk into a casino and come out a winner. The only way you should buy short-term out of the money options is if you have one KILLER market timing strategy; you then could amass a fortune.

Truth is, there are four things that could happen for you to lose buying these types of options, and only one very unlikely event that will produce a profit. Think about it. If you buy an option and the market goes in your favor, but not past the strike price + whatever you paid for the option, AND within the time period of the option, you lose.

If the market stays the same, you lose. If the market moves against you, you lose. If the market moves in your favor but not to the strike price, you lose. You have A LOT going against you. This type of option buying is common with traders, but you should stay far away from it.

3.Asking your broker what type of money management strategy to use.

There is one decision that every single trader makes when they place a trade whether they put any amount of thought to it or not. That decision is trade size. Every time you get into the market, you are making a trade size decision. Do I trade one, two, more, etc. This is the SINGLE most important trading decision that will affect your long-term success (or failure) in trading.
Many traders rely on what they feel is a good trade size, and many traders end up asking their broker, who then tells them “never risk more than 1% - 2% of your account on any given trade”. Well, that sounds good and all, but it is the most inefficient money management strategy you can use. If they say “trade one contract for every $10,000 in your account”, that is also one of the worst money management strategies you can use.

Most traders spend a majority of their time on technical analysis (where to get in and where to get out), but look where that has gotten most traders. You, you spend some serious time learning and understanding money management strategies. Proper money management can magnify profit potential dramatically AND at the very same time, keep you from blowing your account out when the system or strategy doesn’t work out. This is critically important if you want to stay in the game.

4.Over-Trading

I actually have two deadly trading sins that are money management related. Make no mistake about it, after speaking with thousands upon thousands of traders, after going through more than one lesson of my own, over trading (too much risk in the account) is the NUMBER ONE ACCOUNT KILLER by far.

Even those who understand money management principles can be guilty for several reasons. But the first thing is to understand what would be considered over trading for your account size, risk levels, goals and trading strategy being implemented. For that, you need to understand first and foremost the consequences of various money management strategies in order to implement the right one. Secondly, you need to understand the realistic expectations of your trading strategy, including worst case scenario. Only then will you know whether the money management strategy is too risky for that particular trading strategy.

5.Under-educating

Does an airline pilot fly a plane after reading a few books on the subject? How about a brain surgeon? Or perhaps a few seminars on top of the books properly prepare them? How about any skilled profession. Yet, the level of trading education that exists at the time of the first trade is dismal at best. Do you know how much education I had before I bought an option? I knew how to buy an option, and that is about it.

If 95% of traders lose, that might be the first hint that this requires some skill before you can expect to be successful, and even then it is not assured. Education is not learning about a strategy, or learning about a system that has 75% winners. It is UNDERSTANDING what is out there, why and what gives it any chance of actually making money in the long run. That goes far beyond learning to buy when the blue line is crossed and sell when the red line is crossed.

To make things worse, the amount of foundational education that is available is scarce. Everyone is pushing the seminars about buying above the blue line and selling below the red and all your dreams will come true. This is part of the reason that I require traders to go through one of my courses on any given specific strategy before they can access the rules or signals. You must build a foundation of understanding before you can expect to successfully trade.

6.Expectations of trading for a living.

Given all of the above, you may or may not have this expectation anymore based on where you are at (if you had it at all). It amazes me how many traders believe they can trade for a living yet knowing that most people don’t and most who have tried have failed. I promise you as sure as I am sitting here right now thinking about how I am going to bag me one big rat, if you are guilty of the trading sins above, the probability of you ever trading for a living is next to none.

7.Bringing ego into trading decisions.

Ego blinds people. This is almost always inextricably linked to many of the above. Many traders come into this endeavor knowing that most are not successful, or at least learn it pretty early on; yet that doesn’t stop them from doing the EXACT SAME THINGS that others are doing. This cannot be contributed to anything other than ego.

“I’m different”, “yeah, others may not have succeeded, but I have a medical degree” or law degree or engineering degree, or you fill in the blank. “I know many aren’t successful, but I’m not like them, I will be successful my first year”. Uh huh.
Approximately 65,000 traders are going to read this article and perhaps 100 will stop and say, “you know, I can’t keep doing what everyone else is doing and expect to succeed?. Most will continue doing what they have been doing and most will never be successful. I’ve learned this because I have bee in the industry for a long, long time. Ego is a killer and you need to slay it before it slays you.

About the Author
Ryan Jones is considered one of the trading industries “most complete traders”. Starting his trading career at the early age of 16, he had traded nearly every major market and strategy by the age of 21. At the age of 26, Ryan signed a book deal with John Wiley making him one of the youngest authors ever in the field of futures trading. His book, The Trading Game, Playing by the Numbers to Make Millions is still considered to be the authority on the subject of trading and money management by many leading traders. Ryan’s advanced experience and knowledge across many trading fields such as Technical Analysis, Option Trading, Money Management and the S&P have lead to several trading feats, including turning a $15,000 account into over $107,000 in less than 90-days short-term trading the S&P (real money).

What is FEAR ??

Fear in its myriad forms is the most uniquitous of trading emotions, followed in a close second by its partner, greed. So common are these two emotions that they have become cliches to represent in simplicity the whole of the complex trading experience. Fear in a nutshell is something that we afraid, worry and also dun feel at ease with.

We fear of everything, from small losses to total financial ruination, even when we are winning we also fear that we will lose all the money back to the market. We fear failure. We even fear success. We fear of unknown, and in trading everything is unknown because the future is not knowable. We fear the news, and we fear there will be no news. In a nutshell, we are afraid or we are afraid we will become afraid.

“Applying fears to hopes, and hopes to fears, Still losing when i saw myself to win” by William Shakesphere

Fear can be a double-edged sword. Fear can act as a warning sign for you to get out of your trade to prevent you from losing more or to prevent you from making more. Fear is a message from the future. It tell you that you need to prepare something to prevent something to happen.

Transform Fear to Caution

Trading without caution is a dangerous thing. Even when you buy a house you will buy an insurance policy to protect it. Trading is the same thing. You need to protect your trade by setting a stop lose/profit . Personally i suffer quite alot from not putting my stop lose when i’m away from my trade. As a result, my profit of 1k++ become losing trade but is a very good lesson learn.
Recently my trading has been rule by the emotion fear and greed. I fear that the market will turn against me so i buy a protection call to protect my put at the closing. Fear make me do a certain stupid mistake as im emotion panicking. Fear will distract the observation of your trade.

How to prevent Fear in trading ?

you have decide to trade a particular system. you get an entry signal, and put on the trade. You put in your protective stop, and you know what will be your signal or target for exit. There is nothing more to you need to do or worry about. The market will do the rest for you. You are along for the ride, and you know when to get out. So there is nothing to be fearful about …

“There is hardly anything productive about worry or fear when you cant do anything about the circumstances” by Buzz Aldrin

Fear is an emotion. It is created by us and therefore we can uncreated it. Fear is created when we think that our trade will lose a lot of money or things that will prevent our trade from losing. The keyword is think which is thoughts in our mind. When you keep on thinking of the thoughts of losing money and fearful of it. STOP!! Take a deep breath to break your connection. Then ask yourself, “Is this probable?” Continue to challenge the thought by asking, “What are the probabilities right now?” Then choose to take control of your thoughts and think term of the current probabilities.
Fear will lead you to disaster if you do not know how to release it. Another way to release fear is to have a shower to calm down yourself.

Useful Thoughts To Counter Fear
- Losses are a simple cost of doing business
- Since you always limit your lose to an amount of your account can withstand, there is nothing to fear.
- You have the courage to do whatever it takes to succeed at trading
- Each Trade is but one of many
- You keep your focus in the present because this is where the action is
- The potential profits are worth the risk
- Trading is about money, it’s not about your survival.
- Trading is only one way in which you can make money.
- You learn and grow stronger with each trading experience
- The future of your trading is bright.

I hope that this article will help a lot of people to counter the fear in their trading game. Fear can be good and bad depend on how you manage it. Proper management of money and emotion will do a lot of wonder to you. Support and resistance is base on the fear factor of human being. All the best in your trading!!