Mastering the Four Fears

T

tireg

http://www.bigtrends.com/document.jsp?documentid=914
A nice reprint from a 2002 Stock Futures and Options Magazine, by Price Headley.

From the article:
"Merriam-Webster's dictionary defines fear as "an unpleasant, often strong emotion caused by anticipation or awareness of danger, going on to explain that fear...implies anxiety and usually the loss of courage." This definition of fear is useful in helping define the issues that traders face when coping with fear. The reality is that all traders feel fear at some level, but the key is how we prepare to address our concerns related to taking on risk as a trader. In this article I will review four major fears experienced by traders, and I'll take it a step further by noting how the outcomes of these fears create undesirable trading behaviors." More in article...
 
All 4 fears mean that you are not ready to trade or that you are among the many who should never be trading. OK lets look at them individually.

1. Fear of Loss
Most are not cut out to trade and need the security of a monthly salary. As a trader you have to create an accurate and reliable methodology. You have to check if infinitesimally, paper trade it, test trade, take it to bed with you and stroke its bottom. Its has to be one mother of a winner. Now if it works but you still sh*t yourself trying to play it in the market then do yourself a favor. Go away and do something else other than trading.
2. Fear of Missing Out
After a blind fuzz of analysis paralysis or a start out catatonic brain freeze or a delayed gambling need to shoot from the hip, you enter late and panic at what is an imagined or real turn in direction - you take out your position yet again at a nervous loss or wash or miniscule profit. Your personality wouldn't have enough confidence to expect the Sun to rise in the East each day. Sorry, pal, trading is not for you.
3. Fear of Letting a Profit Turn into a Loss
You don't really know sh*t about the market you are playing in or you don't know enough yet. Stay away from it until you know the mother back to front in terms of having a very accurate system with a detailed plan to apply it.
4. Fear of Not Being Right - All Too Common
Right or wrong? Free yourself. This is only a game - to win of course. Forget right or wrong. And if you are in the 'all or nothing' category it is the hallmark of erratic and primitive trading.
:)
 
On the 4th fear, I like the analogy I often hear with the baseball player.
A very good player averages 0.300 at the bat, that means that he will miss {or be wrong} 7 out of 10 times he tries to hit the ball.
He can´t let those 7 strikes bring him down... he´s gotta come back to the plate with a fresh attitude and try once again to hit the ball.

That´s what separates the best from the failiures.
 
Without wrong, there is no right. Being wrong gives a sense of purpose to be right in most normal people. Laziness is the easy way out.
 
Just for curiosity: both the article and Mark Douglas mention a fear to win, like people feeling guilty because they make money. Has anyone experience with that?
 
Maybe not a "fear" to win but more perhaps the guilt of winning too much too fast?

I see a little of that in my own trading. There are times when I could add a little more to a position w/o much risk but dont feeling I have enough and the trade will be a good one regardless if I add or not. Of course this is stupid thinking because I know I should add more cause the trade is allowing me to take a little more advantage. The good thing is that I am aware of this dumb thinking and can makes strides to correct it :)


Quote from andread:

Just for curiosity: both the article and Mark Douglas mention a fear to win, like people feeling guilty because they make money. Has anyone experience with that?
More...
 
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