Saturday, December 18, 2010

Common Fear That Trapped Trader

This is purely my opinion and based on my self-experience. There're lot of common fear in our brains that prevent us to become great trader. Most fear may be general and detailed. It may correalate with each other, and sometimes contradictory. Here we go:
1. Fear of Cutting Losses.
Reasons:
a. Feel terrible after Cut Loss, price get back
b. Hurt the self-dignity
c. Just don't want to loss
d. Thousands other reason

2. Fear of Riding the Profit.
Reasons:
a. Feel extremely awful if price get back and become losses
b. Urged to feel the comfort after taking profit
c. Emotionally can't stand the pullback even the slightest move
d. Salary mentality

3. Fear of Entering at Peak/Bottom
Reasons:
a. Don't want to be a sucker
b. Don't want to be wrong
c. Don't want to cut losses

4. Fear of Missing Opportunities
Reasons:
a. Afraid the price will leave him forever
b. Impulsive after waiting then missed the opportunity

5. Fear of Not Profitable After Full Day Hardwork Trade
Reasons:
a. Angry if the work didn't pay
b. Tend to overtrade

6. Fear of Scaling Up
Reasons:
a. Fear of ruined the previous positions
b. Fear of stopped out

7. Fear of Profit Taking too early
Reasons:
a. Fear of losing opportunities

8. Fear of Re-entry the positions at worse price
Reasons:
a. Still agonizing the previous losses
b. Fear of being wrong again
c. Don't want to be stupid

Too many fear out there tilt our power. The truth in trading to counter some of the trade:

1. Trading is all about timing and momentum. You can enter buy at price 100 and waiting for 3 hours to make price moved to 120, or you can buy at 110 and wait just 1 minutes for the price to move 120. No reason to enter the worse price. If timing is right, the worse price will become a better price.

2. Stop Losses. You need hundredth of consequtive losses to become bankrupt if you risk 1% per trades. While you only need one bad trade to wipe out all your account if you don't put Stop Losses.

3. Riding the profit, if it succeed then you're trading with the trend. If not, it may chopped or against the trend. And there's no better setup than trading with the trend.

4. Don't have to profit every day. Rather have -100,-100,+600 than +100,+100,-600. Urge of daily profit may give the second scenario.

That's it for now, hope it useful for fellow traders :)

2 comments:

  1. I was too having fear of trading but after taking forex tips from one the firm I am trading fearlessly and making good profit.

    ReplyDelete
  2. If we provide good recommendations in stocks like what my friend did with KLSE stock analysis for bursa Malaysian market then traders will trade fearlessly.

    ReplyDelete