Nothing to Fear but Fear Itself…

Fear

Fear is an emotion, not a statistic or a fact. The dictionary definition of fear: “a distressing emotion aroused by impending danger, evil,pain, etc., whether the threat is real or imagined” (Dictionary.com) The part that struck me was whether the threat is real or imagined”. Fear in trading is only one kind of fear, the fear of losing money. When I push the trade button I do not fear that I will be killed, I do not fear that I will suddenly fall out of my office window, I do not fear that I will receive the worst paper cut in the world or that my kids will get sick or that my car will break down. I could go on forever about the things I don’t fear when I make a trade because there is only one thing that I do fear when I push the button: losing money.

It’s a real fear. I am not imagining that I see my account draining like someone just unplugged a full bathtub. In fact, I believe I can see the little tornado and sucking sound that is created right before the last little bit disappears. It is really freakin happening! And even if it isn’t at this moment, that is the fear that traders must face. I could push this button and have the chance at Ecstasy. I have the chance to make a ton of cash. But before that ever happens, I am wrapped around fear’s finger waiting to see how the trade will progress.

What if I told you I have a secret weapon against fear!? Something that would take away all fear in the markets and only leave you with that tingly, euphoric feeling of a winning trade!

Well, it would be a total lie because that doesn’t exist.

But, you and I have access to the greatest fear fighter in the world. It’s called a stop loss….

Look at the chart below of a Bombora Trade that set up earlier today

The buy entry came as the 2 crossed the 11 (circled) and almost immediately 2  big bear candles bring back that old feeling of here we go again BUT here is where the mythical, philosophical, and crazy awesome weapon against fear makes a stand. The stop loss. The only way I can fear this trade is to not put in a stop. If I am open to unlimited risk for unlimited reward (which I will absolutely get into in the next couple of posts) then I should be afraid.

But I am not. I have a calculated risk that will not be more than I planned for. If this trade were to stop out, it would have certainly presented another opportunity very soon and we as Bombora Traders know that little stop outs like this could happen a couple of times before we make the winning trade. But with big reward to risk ratios, our plan tells us to keep trading and money we will make.

Don’t let fear in, set a risk adjusted stop loss.

TradingLife:OwnIt

 

 

 

 

 

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