Cutting out is perhaps the worst of all worries about trade. It is the one that travels people up and down, particularly from the start. The key explanation is that so many don't even know that it's a problem! I found this problem is usually at its worst when a price movement is correctly predicted, a position was not opened, and it happened then.
Whenever a trend develops it is a mixed opinion among traders. When the move progresses, those who are suspicious are converted because of fear of failure. The true secret to big profits is to be there before that happens.
This feeling of lack is often connected to greed, sadly, it is just part of human nature. Yet it is a pretty risky thing to do when you think about it. It is completely directly contradictory to the ideals of what we are trying to do!
By moving on to trade because of fear of failure, it is like saying, "I will take that position at any cost." Where is the value?
Also, by taking this type of attitude, you are blind to any possible liability. Again, the exact opposite of what we intended to do!
When reading this, don't feel depressed if it's exactly what you do. It's something that everybody would have done at some point, including myself. However, you can't keep avoiding it (if you succeed). Here's a few bullets that will help you stay straight and narrow and hold it close when it's advisable to trade ...
- Be self-conscious – you may want to find ways to track your own thoughts on the markets. I've done before to find a fast line on any trade after it's completed. It is impossible to forget if you were over-excited in the last few entries and rushed to a late pattern, or if you made a mistake you didn't want to miss.
- Remember the lost chance costs nothing – every time it happens, say it to yourself! A missed chance is missing, it's not a failure. You would not like to miss out, right?
- Missing a predicted move is fine – missing a move that is actually expected to take place is one of the most frustrating feelings. Perhaps because you feel a little foolish, but when you think about it, it is perhaps one of the most insane feelings. After all, you expected that the transfer will take place! Then why do you give yourself hell?
Trading Fears: Losing
We’re all here to make money. So losing in general is always going to be a bit of a worry.
Before you get stuck into any market, you’ll need some kind of edge. Something that puts you ahead, a strategy. Everything happens for a reason so knowing them reasons is often the best place to start.
However, just about every strategy has some kind of downside. As I’ve said previously it’s not just a case of winning every time, losses are to be expected!
The fear of losing often results in hesitation to both enter and exit trades. The best way I know to overcome this fear is to have information, lots of it. If you’re extremely confident in your approach and understanding of the markets that horrible feeling slowly drifts away. Without the trading fears mentioned, trading becomes pretty much what you expected when you first come across it.
It’s all a matter of perception when it comes to losing money. If you view it as this painful experience that shouldn’t happen when in the markets, then that anxious feeling is never far away. That very feeling will cause you to make bad decisions.
Even the best traders make losses, the difference is they make far less. Why? because they look at it differently, try to program yourself to think like this…
- Losses should happen – They’re part of the game. No strategy can win every time, and if it does, it won’t last forever. Losses should be accepted and learnt from, rather than effect you and forgotten.
- Losses are an ‘expense’ – Looking at trading like its your business is something I’ve heard elsewhere. It’s a healthier way of looking at things, losses are just the expenses on route. You need them to function, you have to be in it to win it as it were.
- Losses happen to everyone – It’s easy to become infatuated with profits when reading around. To the point where most don’t even see the losses on the Pro’s results sheets. Next time you do, have a look for the losses to. It happens to everyone.
Fears of trade: Make wrong judgments
From a very young age, everyone knows that making a wrong decision isn't healthy. Often it is more devastating than others, so we build up a negative feeling about 'being wrong' for this purpose. In trading, it can really be less than an optimal cloud decision.
It is fair to say to make matters harder; those interested in trade are often successful people.
I don't actually mean just financially, but 'doers' are the sort of people they attract. Individuals who constantly pursue change and challenges. People who know the tastes of success, who have experienced it in the past.
To successfully trade, all this is best forgotten, which isn't always easy to do. If you decide correctly, it might be one of the trade fears that hit you hard. The more you find it difficult to admit mistakes, the worse it gets.
Recall, this is part of the training.
The goal is to win, not to win all the time, rather than you lose. Although this can seem obvious when presenting the results of Pro, there is also a secret story about each outcome. I might run a whole day without a loss in a race, for instance – but that doesn't mean that I didn't lose ticks when coping with this race, it just is a case of more than losing.
Hold these points in mind as this insecurity is tackled ...
- Nobody's perfect – things shift, and when you give up your company, you can do what you can to work around. Only the experts are suffering losses. I definitely do. I definitely do.
- Forget about previous achievements – it's perfect if you've been really good in other aspects of life. You may have the determination, but you must forget it and start from scratch.
- Remove goals – goal setting is fantastic, but sometimes things are better by not getting standards and objectives. This is incredibly important when you start off that you don't have a goal income, because when you don't get close to it you can't get upset. Look at the bigger picture, profits will grow when the trade worries have been resolved.
Fears of trade: Letting a profit turn to loss
Easier said than done, "Let profits go and cut losses short." Much of the evidence is the reverse. But a rocket scientist doesn't need to know it won't work.
So many feel the need to make a profit by ensuring that they know they are a winner. So when it goes against them, obviously it can't tolerate it, just like a rabbit in the headlights ... we've all been there. Unless, of course, the financial pain gets too strong, potentially through our fear of failure.
Like the other consumer fears, the way around this fear is to do the opposite of human nature directly. Decide beforehand when and why you're going to quit a company. It's simply not good enough to leave a trade because you have 5 ticks. Just like exiting, it's not good enough to make a profit.
Exiting a trade is a much better excuse because the situation has changed or because the market is not performing as expected. The same is true for both good and bad trade, sometimes a longer-term trade bounces off you in the beginning. It definitely helps in this field, but it's most important to have a clear logical idea why you get out.
I would urge you to leave bad business early, but not profitable ones. Like I said above, having a certain edge you can trust would make things much easier.
Avoid causing gains to become losses and recall ...
- Leave for a good cause – not to feel like a winner. It's just annoying when you take another 10 ticks and feel like you didn't.
- Decide in advance – Until the trade begins, have an idea why you are going to leave. It's not sentimental.
- Getting out of the headlines – This particular fear relates in particular to swing trading. Don't feel like making a trade available – like a rabbit in the headlights. Win or lose, look at the broader picture.
