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Trading Lessons

Five Keys for Traders to Deal with Market Fear

InvestorEducation / Learn to Trade Mar 14, 2011 - 11:19 AM GMT

By: Nazy_Massoud

InvestorEducation

Best Financial Markets Analysis ArticleHow comfortable are you dealing with uncertainty?

As volatility and uncertainty increases, so does fear. When our emotions run high, then our decision making process suffers.


It seems like the harder we try, the worse things get.

We start reacting to things instead of being proactive. Then we feel overwhelmed.

Does this sound familiar?

One of the hardest things to deal with is uncertainly.

We have strategies for managing our risk in most aspects of our trading. However, we seldom talk about or have strategies for the most crucial element, our Personal Risk.

Have you noticed the panic that is going on in the markets? Do you know people who have been a contributor to it? Do you know them intimately?

How do you manage your Personal Risk?

1. Trade With a Clear Mind

Do not make emotional decisions. Realize that emotions are emotions. What differentiates the successful traders from others is how we recalibrate our reactions to our emotions.

I was watching an interview with a surfer. The interviewer asked him what he does when a big surf comes and he goes underwater. The surfer said it was simple. “If I panic, I only have 3-5 seconds of air to breathe. If I stay calm, I have 45-60 seconds of air.”

What does surfing have to do with trading? If you panic and operate from a place of fear, you could lose all of your capital. However, if you take a moment and think about your strategies, you can have much better results.

2. Look at Your Portfolio Objectively

Think about your portfolio as if you are looking at the portfolio of your best friend. How would you advise him/her?

3. Limit Your Input

There are a lot of conflicting points of view. If we want to listen to all of them, it becomes very confusing, and the confused mind does not make a decision.

Instead of listening to everybody, pick the top 3 people that you respect and listen to them. This way, you can remain focused and have much better trading results.

4. Be In Tune With the Markets

Trade the markets as they are and not as you want them to be.

If we are not in tune with the markets and don’t listen to them, we are going to be in a losing game.

After all, hope is a lousy hedge.

5. Be In a Supportive Environment

It is important to listen to the people that we respect and are successful.

There are traders whose spouse and/or friends have little or no risk tolerance. As a result, these traders allow the fear of their spouse and/or friends to become the boundaries of their success.

Who are you choosing to surround yourself with?

Remember, not the most talented or skilled person wins the game. The game is won by the ones who can manage their Personal Risk and have a Mental Edge.

Here is to making success your habit™,

By Nazy Massoud

PS. For more Mental Edge tips and reports on how to have more profitable trades, go to www.MentalEdgeTrading.com .

Copyright © 2011 Nazy Massoud

Nazy Massoud, a Wall Street Insider, shows traders, investors and hedge funds how to master the “Mental Edge” necessary to manage their Emotional Risk. These principles help them learn how to consistently make more profits. For more tips and a FREE report about "The 3 Biggest Psychological Triggers That Can Make Or Break A Trader" go to www.MentalEdgeTrading.com .

Nazy Massoud Archive

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