How to Cope With the Four Major Causes of Fear in Trading Fear in Trading Ever since our days in the cave, we’ve been hard-wired to experience fear as a mechanism for survival. But in the modern world, many of the things we’ve been conditioned to fear have no place in our lives anymore. The four major fears experienced by traders generally stem out of a similar effort to survive. Traders can struggle to navigate and survive in difficult markets or even thrive in calmer times. Of the four most common traders’ fears, it is better to distinguish and understand what types of fear we’re experiencing to deal with the problem. Knowing how to classify the fears we face properly is a giant step closer to resolving the fear that stops us from taking right and reasonable trades. Here are the big four when it comes to fear in trading. We have added links to articles that explain how to deal with each of the fears.
Being Wrong This basic trader’s fear is generally a feeling people face towards their analysis. This usually manifests itself in fear of taking action. Traders enter a trade in a less confident way, and when the market starts to jiggle and play tricks, the lack of confidence grows stronger and makes traders resort to hasty and poorly thought out decisions.
Traders might exit the trade prematurely, not trusting their technical analysis, etc. This can often be related to the recency effect, a feeling wherein traders tell themselves that they can’t have another loss. This fear can have devastating effects on your decision-making abilities. Another common component to feeling wrong is because we might feel committed to our family or significant other. After a stinging loss, we might feel as if we can’t go to them and tell them we had another loss. Having this stressful environment hanging around can be a catalyst for convincing yourself of your infallibility as a coping method rather than facing the consequences of your losses. This fear of being confronted by those you love might get you to cut your trade short or even fail to execute a trade. You might move your stops faster, not by how the market changes, but
