Deadly Sin of Trading - Fear
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!!
