How to Effectively Deal With Fear of Losses in Stock Trading

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Carl Jones_2013

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Dec 19, 2013, 12:00:30 PM12/19/13
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Carl Jones_2013

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Article Title: How to Effectively Deal With Fear of Losses in Stock Trading
Author: Carl Jones_2013
Word Count: 522
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Some traders fall victim to greed while others experience loss in trading to a point where all they see is anxiety and fear. Everyone in the trade expects to make quick money, but when the prices begin to move against the trader, the fear or anxiety take over. Even if we have protected ourselves and placed our self at a stop-loss position still the feeling of intense anxiety takes over. Sometimes when the solution is not already figured the "Deer in the Headlights" syndrome takes over where we freeze up and are unable to take any action as we see the prices move up quickly against us while the losses keep increasing.

This fear of losing too much too soon can also make one exit the trade fair too early. Even before the loss hits the �profit target� the fear of losing the money itself takes over. To overcome this fear, the trader hits the exit button on the ongoing trade which is displaying small profit even when the trader had higher confidence and hence executed the plan to make a larger profit. When there is extreme fear of loss, the trader might resort to uncertain ways to overcome it, whether that leads to jumping into a trade or out of it. It is important not to allow the fear to lead one to unhealthy habits, behaviors or harmful coping attitudes like alcohol abuse.

The inevitable fear handling

Fear is most significant, out of all anxiety emotions, for the traders. Countless traders struggle with the emotion and fear can highly demobilize a trader from using his/her hard learned market and technical skills. Significant trading losses many a times lead to turmoil and emotional distress. These incidences need to be addressed, or else the trader might re-experience the scary memories in the future trading. Following dreadful losses, the trader might get paralyzed and will be unable to enter any future trade.

Although the aspiration to trade may be very strong, the mind�s mental reaction to fear can be much stronger. Foreseeable pain is dodged by not entering the arena. This is not weakness but merely the brain�s attempt for self-protection, even though it leads to much more dis�tress and frustration, and works against a person�s interests as a trader. There are tutorials that teach techniques based on leading edge research from human psychology, to build confidence and curtail fear. Many traders might have already experienced that after a series significant losses, the build up trading psychology gets in to the way of trading, even when traders train and improve their technical trading edge. Numerous traders stop stock trading and do not ever return. Others keep on working hard to correct and understand their flaws in the technical game, later only to understand that no technique they learnt will ever help them over�come the fear. To gain success, traders are required to man�age not only the technical game but also the emotional aspect of stock trading.

�Carl Jones is an independent trader that loves writing about trading!�
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