Trade Aptitude
Results of Wednesday’s Best S&P Turning Points: The short @ 4073.50 filled in the Globex this morning and was only good for 4.25 points before stopping out. The breakout on the other side of the level filled and is open with 6.75 favorable so far.
Today’s Best S&P Turning Points (consider wider stops and less size in fast moving markets):
Buy 4059.25 stop 4055.00. Short 4103.75 stop 4109.50.
The World Sentiment Index: (+100/-100) EASES from +71 to +50 with most major world markets Bullish.
Catalysts: Jobless Claims & Final GDP @ 8:30.
Quick Tip: Subject: Whipping fear.
You know that a winning trader is a confident trader, and a losing trader is a fearful 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:
1. 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.
2. 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.
3. 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.
4. Fear of Missing Out (FOMO). Price is soaring and you’re not long. Impulsively you enter late and catch the turning point down. FOMO comes from scarcity. If you have an abundance of opportunities every day (week/month) you wouldn’t be tempted to chase a trade. Find your abundance.
There are probably more fears applicable to trading, but these are the top 4 I’ve noticed. Using evidence from the field of psychology will help you overcome these fears.
Here’s what is recommended: Act. Because hesitating and procrastinating only prolongs fear and that gets you nowhere. Do something about your fears. Identify them. Write them down. Create solutions.
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Trade Fearlessly,
Mike Siewruk