Fear of missing “the big one”

[Joe Ross]

This question was sent to me from one of our students: Hey Joe! My greatest fear in the market is that of missing a move. I just can’t stand the thought of missing “the big one.”

The best way to handle that kind of fear is walk away from the situation. Get up, and walk away from the computer and any news you may be watching. Remove yourself from whatever it is that triggered the fear. Do anything that will take you out of the fear/panic mode.

Don’t sit down to trade again, and don’t return to the markets until you have managed to achieve some emotional control over your fear/panic reaction. If you can’t get a grip on your fear, then stay away until you are back in control.

Most likely you will find that even if you keep thinking about the move you may be missing, simply getting away from the keyboard and monitor is enough to make a difference. It removes the demand to take action and gives you the mental space to gain perspective and let go of your knee-jerk reaction.

 

[jack hershey]

this guy is sitting there expressing an effect.

What is the cause?

My bet is his trading method is influencing him and telling him it isn't working. His trading environment has become extremely hostile to him because of the process he is going through.

This effect he is creating is similar to the "lizard effect" where self preservation is a big part of his current picture.

Markets are friendly and their data is something that is very helpful for making money. Personally, I like having a lot of leading indicators of price. He may feel his trading method is leaving him in a state of confusion all of the time as he looks at the market.

Is he going to be posting here?

 

[MattF]

there are always trades and there's always "a big one"...maybe not as frequent, but they happen.

"THE big one" only correlates to someone's makeup and their trading system.

I'd rather build up small and get big, then wait for something big and hope I nail it.

 

[KPCURRENCY]

Wow. Joe and Jack. Such giants. I humbly add my two cents.

"Top professional traders understand how to read the interrelationship between volume and price action. The also understand human psychology. They know that most traders are controlled in varying degrees by the TWO FEARS: the fear of missing out and the fear of losses". --Tom Williams, Master The Markets, p. 47.

Joel Pozen of tradingmentor.net would say, " it's not buying that causes prices to rise, but rising prices that causes buying". In other words, this is why people tend to buy at tops and bottoms. Prices rise and they fear missing out so they jump aboard. Of course, this is what the Smart Money wants. Traders jump on board and prices turn around. The Professional Money has used the fear of missing out to suck in traders at the top.

This fear, is therefore, not uncommon. The emailers honesty to recognize this fear says a lot about his/her self. With such self awareness and candor, this trader should be able to overcome the problem. If you can read price and volume, you can see these games as they are being played.

Overcoming the fear, however, means looking into the deep dark places inside. Method alone can not "cure" this. And that is a fact the Professionals count on.

 

[stonedinvestor]

It's not fear folks. I hate to say it- it's greed. Seeing your investment in Enron tick to zero because surely a company that big can't go under- that's fear. General angst at not being at the betting table at all times is greed. I find myself in an "endless hope" setup with some of these trades> I tend to fall in love with my companies and since good news could break any time overnight I hold and hold. This I would label eternal optimist phase. It's also why for the most part I can't get in the headspace of shorting. It's not enough to outsmart the market I want the whole thing to work and for everyone. Of course, that can't always happen.

When I know I have money cleared and the ability to trade there is a bounce in my step for sure. If I f* up a few trades and generally don't like the market conditions it will sour my outlook on life for a while. I'm certainly dragging behind vs spring in the step. My emotional ups and downs need to be controlled- there will be long stretches at a time when I don't open the mail coming into the house. I'm trading and trading and trading, Market bedammed. I don't read the buyslips. I can make money in an up or down market, doesn't matter. Then there are times I am made aware of a big f *up and then maybe boot the next trade and I see some bears on TV & suddenly it's fear time. It's as if nothing good has ever happened to me or ever will again. I hate every stock and everything. In times like that I'll just keep tabs on my portfolio by checking the total as long as it's ticking up I don't wreck the account but then I'll have a high anger day I'll check the portfolio and anything with a red mark gets booted. It's a mass slaughter and not the most level headed of trading moves. But it does free up more money for the crazy cycle to begin again..

 

[Joe Ross]

Thanks for all the great comments. I will pass them on. Jack asked if the trader will be posting here. Probably not, which is why I sent the post myself. The question actually arrived in Portuguese, which our in house expert translated for us. We get a lot of questions in foreign languages or very, very broken English.

I thought is was such a good question that it deserved a lot of answers besides my own. I got them from all of you and they are much appreciated. One trader can't have or think he knows all the answers.

JR