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Traders Fear

February 10, 2007

“Top professional traders understand how to read the interrelationship between volume and price action. They also understand human psychology. They know that most traders are controlled in varying degrees by the TWO FEARS: the fear of missing out and the fear of losses”. Tom Williams, Master The Markets, p. 47.

Greatest fear in the market is that of missing a move. I just can’t stand the thought of missing “the big one.”

Let`s turn around. Why people tend to buy at tops and bottoms?
I think the buying is not causing prices to rise, but rising prices causes buying.
Price rise. The trader fear missing out so he wants jump aboard. After jump on board - the price turns around.
If you can read price and volume, you can see these games as they are being played. Not everybody can. That is a fact the Professionals count on and knows about your fear(s).

Learning prices and volumes indicators is possible, but not enough.
Overcoming the fear of missing a move, however, means looking into the deep dark places inside and, possible, meet there another bigger one fears. Everybody tried to look there, conscious or unconscious, awake or, more probable, asleep. After such experience everybody`s conscious will do his “best” to avoid such interventions.

Back to this fear.
The best way to handle that kind of fear is walk away from the environment causing this fear, but not from the fear. Get up, walk away from the computer, news you may be watching, bed, or something else. Remove yourself from whatever it is that triggered the fear.

Do anything that will take you out of the fear/panic mode and walk, trying to analyze the source of this fear. Don’t sit down to trade again, and don’t return to the markets until you have managed to achieve some emotional control over your fear/panic reaction.

Don`t trade again until you find 1-2-3 conclusions about the causes of your fear. How to know these conclusions are right ones or you`re in a correct directions? I couldn’t`t say you how long will last for you, which thought you`ll have and how right will be it collated to you, and it is not as important at the start. Most important is the start. Once you achieved to a certain point toward the source of your fear, you`ll start/want to think about something else immediately. Don`t miss this point, don`t lose your concentration, and force yourself, your mind to work here. “Working” in this grey area with your thoughts at some point you`ll feel 1-2-3 conclusions/thoughts regarding the origins of your fear that will cause a strange status of the mind. For me this feeling is a different one from the ecstasy, a feeling like rapture, like sunset or sunrise seen from the peak of a mount, escorted with a cool breeze.

I don`t know if i`ll be very successful in trading, what I know for sure is that markets forced me to start looking to my external problems into my unconscious, finding there something that leads me onward. To become better from this point is not that hard as I used to think.

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