FEARING BEFORE LOSSES
There is a big difference between averse, risk and fear of loss. I should hate to lose. In fact, you can program your brain to not lose orientation. But not to lose, a process of thinking is logical of the issue, but as a reaction, based on the emotion. (Good Future)
Two trends that are based on human in play. The first is the sunken cost fallacy and the second is the exaggerated loss syndrome. (Good Future)
Sunk cost fallacy: you’re in a business that he starts to go against you. She has last a Commission of what has to compensate for cost reason. On the other hand, you have spent time and effort, the research and planning of this trade. You think that the time and effort costs. You have been waiting for this opportunity, and fear that now, it’s you have to this trade to lose. The wait for the opportunity is something that is counted as a cost factor. You don’t want to lose all these costs through the decides to act a little more space. With the time that you realize what you’ve done, the pain is almost unbearable. Finally, you have your loss that could have been great now much more by what. The size of the loss gives their fear never lose again. The end result is brain lock and the inability, the trigger on a trade.
The exaggerated loss syndrome: Give the meaning of losing in a trade of two to three times the weight in a trade. The losses have greater importance who wins in his head. In fact, it is no more or less important than the other. In fact victories not have so numerous as losses, when the victories in the significantly more large size, the losses. Of course, the best have more victories, defeats, with bigger losses than victories.
Its operations only in its potential for future losses to evaluate or to win. Ask yourself: “what benefit and what you want to lose in this trade? is what this trade can ” Think through the thing. “What is worse that I can pass, if this trade increased, and have done equally much earlier a plan and a strategy for me to remove?” “When I start to lose, there is a possibility that things are changing around and produce a winner?” Learn to look at the cost of an operation as part of their operating expenses. Try, is a way of thinking that throwing away money. If le this is more space, to trade it, that often draw the money.
Review of money invested more money earned
The dealers have a tendency more careless with money, which won to have with the money that you have invested. The fact that the money that won does not mean the good operation, you should play with that money. People are more willing to take risks with the money, which as a result of true, as if the money had been found. Forget that money money. The valuation of money, depending on where it comes for a merchant to fatal consequences cause. The tendency to take greater risks with funds from operations, no point makes with the money as capital. However, operators must to take risks with money earned in markets, never with money from her savings account to dream that.
What needs to be done?
Wait a while before routes put on the earned money on the game. Keep your account of operations at a constant level. Your winnings from your account and put them on a safe conservative seat to deprive you. Keep more money for themselves, it is more likely than your own account.
Forget inflation margin
Before the crisis of 1987, S & P 500 future actions to a minimum of around $12,000 Exchange margin. Immediately after the accident rose on the edge of some brokers needed to $36,000 and superior.
The error was Willie what was called the Monetary Union ‘Illusion’. Willie is that you moved due to their location in its favor, had more power for sale and much more leeway. His agent quickly associated with Willie reality. While some runners can enable, which really does not make profits not paper additional resources i.e. can use for the edge. Dream of fabulous profits of this trade of Willie were just that, a dream. Willie should be grateful, that his agent must not involve are in problems. Pyramidal with services not consumed paper is not the way to success as a futures trader.
What needs to be done?
Should you give has is that each call to “Snap” to position an open is a new position. Each plug-in is all new risks, and each plug – in is closer in trade supplement, will fail and be a loser. When planning a business, keep in mind that the if the market is unstable, margin requirements can climbing to thwart any strategy for adding to his position. It is nothing wrong with building a position of a leg while prices increase or decrease, but if volatility, you want to add an increasing of margin requirements make, and note that it is possible that you can not add.
Sellers of options can easily into equally difficult positions. Defend threatened to expand to new strikes a short position options, find larger faced not only the need for a larger position, but also an increase of in margins in the creation of this position. They may discover that they need to eat no longer sufficient room to defend a certain position, and therefore a significant loss. (Good Future)
More key error
Along the courses of frequently mentioned some important mistakes by traders. Here are some more:
Error: The confusion of the negotiations with the investment. Many traders justify to do business because they think that they are working to keep their money. While this money may be invested, is not quite right on the money to speculate. Unless the owner of the matter prima based, such as the sale is short of speculation and speculation not the investment. Although it is possible, future will not invest typically in that. A merchant must not to be feared, what your money for it to work. The concern of traders make rational speculation and timely manner, keeping their small losses for fast stop and not too long, increase their profits by spending more than a small percentage of which he has already earned what so up to a point where he returns,. (Good Future)
Error: Copy other people, the trading strategies. Operators of ground, I reported about the time that the actions of one of the largest and most experienced operators of floor copy it was. While the ground won the operator, lost my friend. Generic of trade rarely come forward. It is possible to have a different set of goals than the person who is to be copied. You can’t tolerate may, mental or emotional losses of its strategy will have to face. It may have not the depth of the commercial capital of the person, that you copy has. For this reason after a negotiation of the Futures (no investment) advice, while at the same time you are using not their own judgment rarely works long-term. Some of the best traders have noticed had, but usually their subscribers fail. Futures trading is so personal that it is almost impossible for two people to act in the same way. (Good Future)