Fear & Perceptions Of The Online Stock Market
By Ultimate Trading
Traders Should Have A Healthy Fear Of The Online Stock Market
Its a well-known saying - that traders should have a healthy fear
of the online stock market. It seems like a perfectly reasonable
assumption to make. The market is volatile, and each trade you make
is to some extent unpredictable. But its one thing to learn to
accept the risk of the online stock market, and another entirely to
be afraid of it.
Ninety-five percent of the trading errors you are likely to make,
those errors that will cause you to consistently lose money, will be
due to your attitudes - your fear - about being wrong. Fears of
losing money, of missing out on profitable trades, or of leaving
money on the table will cloud your thinking when you are trading.
Your fears can cause you to act in such a way that what you are
afraid will happen. If you're afraid of being wrong, your fear will
influence your perceptions of
stock market information in a way that will cause you to do
something that ends up making you wrong.
When you are afraid of something happening, all other possible
outcomes cease to exist. You can't perceive the other possibilities,
or act on them properly if you do recognize them, because your fear
paralyses your actions in the online stock market. Physically, fear
causes people to freeze or to run. Mentally, it causes them to
narrow their attention to the object of their fear.
This means that thoughts about other positive trading outcomes, as
well as other information from the online stock market, are barred
from your mind. You cant think about all the rational things you've
learned about the online stock market until the event is over and
you are no longer afraid. Then you will think to yourself, "I knew
that. Why didn't I think of it then?" or, "Why couldn't I act on it
It's difficult to understand that the source of these problems is
usually our own attitudes. Many of the thinking patterns that
adversely affect our trading are a natural result of the ways in
which we were brought up to see the world. These thought patterns
are so deeply ingrained that it rarely occurs to traders that the
source of their trading difficulties is internal, and derived from
their state of mind. It can seem more natural to see the source of a
problem as external, in the online stock market.
This happens because it feels like the
stock market is causing pain, frustration, and dissatisfaction.
Most traders do not want to be concerned with such abstract
considerations as considering how their thoughts influence their
trades, but understanding how beliefs, attitudes, and perception
effect trading is as fundamental as learning how to serve is in
You could say that understanding and controlling your perceptions of
online stock market information is important only to the extent that
you want to achieve consistent results. You don't have to know
anything about yourself or the online stock market to make a winning
trade, just as you don't have to know the proper way to swing a
tennis racket or golf club in order to hit a good shot -
The first time you played golf, for instance, you might have hit
several good shots throughout your round, even though you hadn't
learned any particular technique. But your score was still probably
well over 100 for 18 holes. Obviously, to improve your overall
score, you needed to learn technique. The same is true for the
online stock market.
Traders need technique to achieve consistent results. If a trader
isnt aware of, or doesnt understand, how their beliefs and
attitudes affect their perception of online stock market
information, it seems as if it is the online stock markets
behaviour that is causing the lack of consistency. As a result of
this perception, it stands to reason that the best way to avoid
losses and achieve consistent profits is to learn more about the
online stock market.
This bit of logic is a trap that almost all traders fall into at
some point. Unfortunately, this approach doesn't work. The online
stock market simply offers too many variables to consider, and these
variable often conflict. Furthermore, there are no limits to the
market's behaviour. It can do anything at any time. In fact, since
every person who trades is an online stock market variable, it can
be said that any single trader can cause virtually anything to
That means no matter how much you learn about the market's behaviour,
and no matter how brilliant an analyst you become, you will never
learn enough to anticipate every possible way the
stock market can move. If you are afraid of being wrong or
losing money, you will never learn enough to compensate for the
negative effects these fears will have on your ability to be
objective and to act without hesitation.
You can't be confident in the face of constant uncertainty by
acquiring information. The hard, cold reality of trading is that
every trade has an uncertain outcome. Unless you learn to completely
accept the possibility of an uncertain outcome, you will try, either
consciously or unconsciously, to avoid any possibility you consider
painful. In the process, youll subject yourself to any number of
costly self-generated errors.
By accepting the risk, and moving beyond your fears, you can greatly
increase your ability to be a consistently profitable trader. This
requires self-knowledge and discipline, but the rewards that can be
attained on the online stock market more than make the effort
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