Fear & Perceptions Of The Online Stock Market

Provided By Ultimate Trading Systems

Traders Should Have A Healthy Fear Of The Online Stock Market

It’s 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 it’s 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 online 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 can’t 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 then?"

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 online 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 tennis.

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 - occasionally.

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 isn’t aware of, or doesn’t understand, how their beliefs and attitudes affect their perception of online stock market information, it seems as if it is the online stock market’s 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 happen.

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 online 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, you’ll 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 worthwhile.

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