"During these turbulent times there are a lot of opportunities in the markets... especially for those who buy index options...I've been fishing for lower price of puts for about three days and got it right, but on Friday didn't buy them..I even had a plan set up to buy them and when to buy them and was expecting this 8% down move in indexes today. What is this that kept me back from buying, how can I pull the trigger next time?"
These days, I'm not sure what to say in response to your question Kirk. Surely, there is money to be made if you have the nerve. But the markets are so volatile and the future is uncertain. One day it seems like Congress is going to approve a bail out plan, and the next day it fails to gain approval. We see the Dow drop one day and recover the next day. That's usually expected due to feelings of regret. I had a hunch it would happen, but these days, I personally don't have the guts to make the bet.
Why are we afraid and what do we do about it? Everyone is a little afraid of losing. It's natural. And these days, losing seems to be the rule. (Sorry to seem so pessimistic, but it's hard at times to hold back my true feelings.) But winning traders are objective when it comes to trading capital. Losing doesn't faze them. Some of the biggest winners are fearless. I think it is just a matter of personality for some people. Some people are more prone to fear, and it's hard to work around this fear. It's like driving fast on a curvy mountain road. It's scary to some people and it should be! (When I was a teenager my uncle and I used to do it all the time. He took risks and it got the better of him in the end, unfortunately. I look back at those times of my youth, and at 46 at think I could never take that risk now that I fully understand the consequences of an accident.) Fear is natural for some people, and fear protects. Sometimes it's safer to accept fear rather than fight it.
Winning traders learn how to look at trading capital coldly and objectively. But as Arianna Huffington notes, "it's hard to be fearless about something that is so elemental, so wrapped up with survival." Not only are some people unable to view money objectively, they have deep seated psychological conflicts about money. For example, "poverty consciousness" is a problem for many. Poverty consciousness is the fear that no matter how much money you have, it's never enough. The idea of possibly losing it all can "fill us with gut wrenching terror," according to Ms. Huffington. Poverty consciousness can at times act as a motivator to drive us to accumulate so much wealth that we will never face poverty again, but many times, it is a constant source of anxiety.
For people with poverty consciousness, money takes on symbolic meaning. Money may act as a social barometer of how well we are doing, or it may become associated with security, freedom, and choices. As true as this may be, it is the root of fear. It's hard to stay objective when significant psychological meaning is placed on money.
How do you overcome your fear about losing money? "True fearlessness about money can come only when we are not driven by an insatiable desire for security," according to Ms. Huffington. Instead, a person must live a life driven by passion and purpose, regardless of financial circumstances. When you are passionate about something, it will override your fear of poverty. If you have abundant passion, abundant optimism, and abundant nerve, you will overcome your fear of losing. What's the point: The only way you can take a risk is to pretend it doesn't matter if you lose. It's simple in theory. If you can convince yourself there are no potential negative consequences for making a trade. you can pull the trigger. If you can believe it's a "sure thing," you will be able to pull the trigger. If you believe that you can make back any money you lose with ease, you will be able to pull the trigger.
I hope these comments help, but today I have little to tell you. I think many traders are anxious and they should be. If you are a natural risk taker, you may not have trouble trading these days, but many people will have trouble. The key to pulling the trigger under stress, unfortunately, is to minimize potential negative consequences. Risk money you can afford to lose, or fool yourself into believing it doesn't matter. But that's hard to do if you feel deep down that losing money really matters.
Written by Michael Shopshire
Visit www.apextrading.webs.com
No comments:
Post a Comment