The main enemy of traders is fear. This is why stock trading program include techniques in battling fear in order for traders to achieve the goals set.

There are 2 universal fears in trading. The first is the fear of being abandoned; another is the fear of losing control.

Mark Douglas, a trading psychology guru, noted in his book, Trading in the Zone, that most investors believe they know what is going to happen next. This causes traders to put too much emphasis on the outcome of the current trade, oftentimes ignoring the performance as “a probability game” that they are playing over time. This results to investors getting too high and too low and causes them to react emotionally, with excessive fear or greed after continuous losses or wins.

Douglas’ four fears are but an outgrowth of the two universal fears. They include fear of loss, fear of being wrong, fear of missing out, and fear of leaving money on the table. Fear limits traders. As a fact, the worst that it could do is to cripple or immobilize you as a trader. So you have to learn to combat fear so as not to get caught in detrimental or catastrophic loss.

This entry was posted on Wednesday, August 29th, 2007 at 8:00 am and is filed under Stock Trading. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.