Embracing the Fear of Losing Money

  • FEAR = False Evidence Appearing Real. Almost all fears never materialize.
  • When facing these fears, and we must face them, it might be good to ask the question “what is the worst thing that could happen?” If the pain in the answer to this question is too much to bear then simply exit the trade.
  • The main reason traders’ exit their losers is that the pain of losing one more dollar becomes almost unbearable. All of this pain could be eliminated by using a trading plan and learning to think in probabilities — nothing is certain.
  • Ask yourself what is the worst possible thing that could go wrong with the trade and what would be the best possible outcome that could happen with the trade? Somewhere in between these two extremes is the logical outcome.
  • Differentiate between rational and irrational fear. If it isn’t life threatening, it is probably irrational fear.
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