Fear Destructive Opportunity Big Trading Transactions
In the previous article we have a glimpse of greedy, one of the dangerous diseases that affect the psychological condition of traders that negatively impact the decision-making process and further destructive for our trading account.
However, the effects of such attacks on some traders do not stop only in the loss of funds, either the money itself or the money entrusted by the client.
Ultimately the impact of these diseases also returns to the trader, his general confidence becomes damaged and the effect is greater for traumatic traders.
Fear, the strongest disease that attacks traders
Fear or fear is the most powerful of all human emotions and perhaps the greatest emotion that attacks traders, stronger than greed. The human nature is not wanting to lose something of value from itself. For traders, losing some or all of the funds is a very scary thing.
Ever seen a person who strongly refused when invited to board a plane (aerophobia)? Surely his rejection comes from fear of flying or fear of heights, not because of his greed.
The effects of fear continue to stick in the mind of the sufferer regardless of whether the threat is real or just dibayangannya only.
Fear is actually a response to survival. When traders become frightened, they let go of their transactions and do not care at any price. Fear causes panic, and panic leads to poor decision making.
Fear is a good emotion when used when we are trying to avoid a low risk-to-reward ratio of an opportunity in the market.
On the contrary, fear also causes us to lose a golden opportunity when the market actually presents a high risk probability (good risk-to-reward ratio), a fear that is created from some losses in previous transactions.
Even often just because of one previous loss, in the next opportunity, when the market is good we are afraid to enter it.
Fear also makes traders ejaculate premises aka closing position with a little advantage when in fact he has a very good chance to achieve a much greater profit if it remains objective and continue to follow the market trends that exist.
Every trading opportunity is always independent
The fear exists and not to be avoided but to be overcome, controlled proportionately. Always remember that every trading opportunity is always independent, stand-alone and unrelated to previous trading, in terms of probability of success.
Therefore, just because we may have lost money in previous trading transactions, does not mean we should be afraid to enter the next trading. That is one of the functions of the written Strategy and Trading Plan. Strategy and Trading Plan is very useful to reduce emotional factors as we prepare to enter and when already in the market.
In conclusion, by really understanding the power of fear then we already have one of the key parts to increase trading success.