Is Self-Doubt And Fear The Same When Trading?

Fear is optional, danger is real. This was one of the first things I heard from my trading coach. It most likely came after he asked me, “Decide what you want to do, be right or make money?”

Make no mistake, all traders have a degree of fear when it comes to possibly losing money. It is the relative high or low degree of fear that often times controls the trade. And believe me, it is all relative since traders have varying degrees of affinity to their funds. Folks playing with an inheritance clearly would play the market differently than someone playing with scared money, like a mortgage payment perhaps.

The fear of losing money can, and often does, keep a trader from pulling the trigger on a trade. The question is: is it just outright fear of losing money, or is it more subtle than that?

Is it self-doubt, those mixed thoughts of go or no go, instantaneously assessed accepted or rejected with varying degrees of logic mixed with fact and hope? Is it those thoughts, racing incessantly through the trader’s mind that ultimately forces the conclusion that the risk is too great?

There are so many things going on simultaneously in that trader’s mind that, unless he/she has been here before, they’ll draw the only conclusion they can… don’t do it.

Maybe the trader had a string of losing trades. or the opposite, many winning trades and now the trader thinks he’s “due.” That alleged mind of a trader, when faced with the go or no go decision, is easily manipulated into an action. Choosing to do nothing is a decisive action.

One thing we know about experience: it is that quality that enables you recognize a mistake when you make it again.

Oddly enough, the trader on the other side of that trade, the one who thinks the stock will go down not up, is going through the same process. Come to think of it, in trading, that is not odd, it is the norm.

I mean, you do respect that when you are thinking of buying a stock with dreams of selling at a higher price, you must respect that you’re buying from someone (figuratively speaking) that must think it’s going down, otherwise they would not sell.

As such, we have just described the market forces at work. This is the market pure and simple.

The trader looking to buy low sell high and who fears pulling that trigger with visions of losses in his/her head MUST recognize that THIS trade has absolutely no relationship with past trades regardless of those outcomes.

A cool, calm, and collected trader will think in terms of his overall trading plan on a new trade. An experienced trader WILL have a trade plan befitting his trading style. And most important, a trader RECOGNIZES THAT EVERY MINUTE OF EVERY DAY IS A NEW MARKET.

If the potential trade fits, you must submit. (Thank you, Johnnie Cochran.) Hit the Enter key!

If still more unsure than confident, one must pass. The risk in taking a trade lacking confidence will oftentimes force an unintended early entry or exit usually resulting in a loss because a trade plan was not adhered to.

Uncertainty leads to ambiguity which leads to fear and confusion. Who can take a trade under this stress? Uncertainty, ambiguity, fear and confusion… is there any doubt that there would be self-doubt?

There is, to my knowledge and experience, only one way to overcome the self-doubt: You said you wanted to be a player, you wanted to trade and make money. Than LEARN your craft beyond basics, master your craft of trading. Learn to read stock charts like the best of technical chart readers. Learn to understand and appreciate market dynamics, those driving forces behind the scenes that make big money move markets.

Those are the same markets that you should find acceptable to go long or  short. Why is that? Because the late great Johnnie Cochran said as much.

Visit the site some day…

About wallstreetpirate

Thirty-five years in financial services from insurance to registered investment adviser, and trader (now retired). Currently helping wanna-be traders and experienced alike as a trading coach and mentor. I've been in and around, on top of, in the middle of, and on the bottom of the stock market for a long, long time. Here's all I've learned: Trading is about behavior, psychology, and appreciating what the charts are saying technically. You can't fake it. Either you know what you're doing or you don't. And as much as this isn't rocket science, it takes knowledge and a skill set to survive.
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