When I started this two-part series on how to overcome your trading fears, markets were still booming. My, how quickly everything changed. It’s safe to say that talking about trading fears is even more important now than it was in February.
How to overcome your trading fears
If you missed part one, take a moment to read about the fear of missing out and the fear of loss. In this blog post, we’ll discuss the fear of being wrong and the fear of letting a win turn into a loss.
Fear of being wrong
Trading is not a game of perfect. I don’t care if we are enjoying a strong bull market or carefully navigating a volatile bear market – you will suffer losses. The only way to overcome this fear is to let go of your ego and back away from the trade.
It might surprise you to learn that I take losses all the time. They may or may not be my fault. I don’t fret about it though. I let go of it, and I look forward to the next trade, as it might be the winner that starts a nice streak.
Remember that trading is about making money. You can be right and lose money, and you can be wrong and make money. I know that doesn’t make much sense, but in a world of uncertain outcomes, trading doesn’t always make sense.
Again, check your ego at the door, humbly admit when a trade is wrong and move along.
Fear of letting a win turn into a loss
It’s extremely defeating to watch a nice gain on a trade evaporate into thin air. “What happened?” you think. “The stock was supposed to move up and stay up!” No doubt this will rattle you, and that feeling will probably linger for days.
As I like to say, we are in the moving business, not the storage business. This is not your grandfather’s market; you cannot buy and hold stocks forever. Today’s markets are subject to large doses of volatility, high debt loads and massive Fed stimulus plans.
Your job as a trader is to sell. Hit that sell button as often as you can. Book profits when you have them – not when you have more of them. During this highly volatile time, your profits can be quickly stripped down to nothing. Only you care about your money, so take care of it.
