Fear of losing This is the greatest fear of any trader. As a beginner, you will probably experience your first fear of losing money when it's time to switch from a demo to a live account.
The late Mark Douglas outlined the different stages we all suffer from when trading (and actually, in life) in his book “Trading in the Zone.” The four fears are Fear of Missing Out (FOMO), Fear of Loss, Fear of Being Wrong and Fear of Letting a Win Turn into a Loss.
Fear in trading has many forms: fear of losing, fear of missing out (FOMO), or fear of being wrong. A good trader balances all these risks and acts rationally under all circumstances. He or she tolerates stress and filter out external pressures. He or she most likely has a good trading plan.
When it comes to investing, fear can be classified into two types: Fear of losing money. Fear of an under-performing market.
Fear of the unknown is universal, but it seems to take form most commonly in three basic human fundamental fears: Fear of Death, Fear of Abandonment or Fear of Failure.
1. Arachnophobia – The fear of spiders. Nearly 30.5% of Arachnophobia sufferers (the excessive fear of spiders or other arachnids like scorpions) are living in the United States alone. It is one of the most common animal phobias around the world.
The best way to overcome the fear of trading is to understand what trading is all about. You can expand your knowledge by reading good trading books and taking up trading courses.
What are market risks? The fear of price fluctuations may be the one risk that keeps most would-be investors from actually investing. The prices for securities, commodities and investment fund shares are all affected by price fluctuations.
Lack of knowledge
This single biggest reason why most traders fail to make money when trading the stock market is due to a lack of knowledge. We can also put poor education into this arena because while many seek to educate themselves, they look in all the wrong places and, therefore, end up gaining a poor education.
You will learn to scrutinize your trading drawbacks and use a variety of techniques to overcome them and improve your trading style. Although there is no 'one size fits all' methodology, these trader pitfalls are usually caused by fear, anxiety, confidence deprivation, and how you respond to the trades you take.
Why is investing scary? Investing is scary because returns aren't guaranteed. Instead, they depend on how well your investments are doing and how much they're worth when you sell them. As a result, there's a risk you could get back less than you originally invested.
The fear of loss is a powerful emotion for investors — and, if left unchecked, can cost them big bucks in the long term due to years of forfeiture of investment gains.
The longer you trade with patience and discipline, the more it will pay off. If you consistently trade day by day, strictly following your trading plan, you will soon develop positive trading habits, which one day will evolve into sound trading confidence.
Some traders take a brief walk in the park or an afternoon meditation session each day, others sit down with a good book every evening, still others have stress-free hobbies where they get to completely escape for a few hours each week.
What is Trading Psychology? Trading psychology refers to the emotions and mental state that help dictate success or failure in trading securities. Trading psychology represents various aspects of an individual's character and behaviors that influence their trading actions.
One way to beat the market is to place a large bet on a limited number of stocks. This is the opposite of diversification, which aims to reduce risk. Concentrating your investment eggs in one stock or small basket of stocks increases risk, which also increases the chance of an outsized return.
(Note: There are five core fears, or “universal themes of loss,” that capture the basic interpretations of danger that we all make. They are 1) fear of abandonment, 2) loss of identity, 3) loss of meaning, 4) loss of purpose and 5) fear of death, including the fear of sickness and pain.)
The Hierarchy of Fears
In a 2022 poll, similar findings emerged. A fear of snakes, heights, spiders, and public speaking rounded out the top four. I suspect many readers know the terror of unwanted, directed attention.
There are only five basic fears, out of which almost all of our other so-called fears are manufactured. These fears include extinction, mutilation, loss of autonomy, separation, and ego death.
According to All About Cats, agoraphobia is Australia and the world's most common phobia, with 61.67 per cent of people identifying it as. Agoraphobia is a social phobia commonly understood as the fear of public spaces and crowds.