Daily Traders Blog - Whipping Fear
Subject: Whipping fear.
You know that a confident trader is a winning trader, and a fearful trader is a losing trader. Part of your personal development plan should be eliminating your fears. Yes, fears. Plural. You can have more than one. Over the years teaching traders I’ve noticed different types of fear.
- The most obvious is fear of loss. Managing your risk, pre-determining your “risk number” (the amount that negatively affects you either financially or psychologically) is the simple answer. Everyone can do this.
- Fear of being wrong. This is a huge problem with traders and not so obvious. Look back to grade school. The teacher asked the class a question and only a few hands were raised. Not yours. Did you not know the answer? Or were you scared to be wrong in front of your friends? Fear of being wrong paralyzes some traders even when their risk number doesn’t.
- Fear of not being in control. We all know people who are most comfortable when in control. They always offer to drive, direct the conversation, choose the restaurant, the movie, etc. Not being in control is scary to them. Unfortunately for them, the markets cannot be controlled and assuming so leads to frustration and failure.
There are probably more fears applicable to trading, but these are the top 3 I’ve noticed. Using evidence from the field of psychology will help you overcome these fears.
Here’s what is recommended: Take action. Because hesitating and procrastinating only prolongs the fear and that gets you nowhere. Do something about your fears. Identify them. Write them down. Create solutions.
Need help with solutions? Click here for world-class advice.
Trade Fearlessly,
Mike Siewruk