What to do when you missed the chance to join the movement? How to control panic?
Today I am answering two questions I got from a rather beginner trader.
How to control panic on the market?
Let’s start from the panic topic. The question is
“I make a lot of mistakes because of panic. How to control it?”
Panic in trading arises when we are not well prepared. You have to be a good player to go out and fight with the best in the World that we have access to. But they have access to us and our money :) You have to face up to them. The market is not a mindless creature. It consists of living people, very intelligent.
Let’s go next…
How to deal with missed chance to join the movement in trading?
“What to do when I have an analysis done, a signal appears, but instead of an entry there is hesitation, and the price goes as expected, but without me? What to do when I have an open trade, but the electric power goes out? Strong emotions arise. It sometimes happens that I enter the market forcefully at that time, but the result is devastating.”
Let’s start with the last point. This is classic action under the influence of emotions. You just have to let it go :) Don’t trade when such an emotion/need arises in such a situation.
As for the power outage, there is nothing we can do here — the milk has been spilled. You as a trader are responsible for the technological facilities you work on. I recommend getting a good UPS (a type of battery that you connect to your computer and that is able to keep it running for a while. Shorter or longer, but enough to shut down the trade).
The bigger problem is when you lose internet connection at the same time. As a trader it is best to have 2 or even 3 good and independent (!) internet connections. Independent, i.e. from different providers, so that all of them don’t fail at the same time. For example, cable + USB from a mobile network (other than cable) + cell phone (it’s already a standard).
Another extremely important issue — SL and TP. They must always be there! And there is no mercy.
Why? Because there are random situations that you cannot do anything about. For example: a trader friend of mine had an open position, he answered the phone and it turned out that his wife was in hospital, in an accident. He left everything and went to see her. As a result, he lost several thousands. If there had been a SL, there would not have been such a loss. If there had been a TP, it is possible that the price would have reached it.
Every mature, responsible trader puts both SL and TP. Ask yourself, is there any reasonable reason not to do it?
Another thing, picking up the phone when you are in the market is a mistake. If someone has an important matter, they will call a second or third time or send a text message. You’ll get a call back. And if you’re waiting for an important message, don’t trade. Any distraction from the market is detrimental to your performance.
Next, don’t trade when there is a thunderstorm, windstorm, maintenance workers are working on the lines, etc. These are dangerous risk factors.
You also need to have your broker and account number handy to manage/close your position over the phone if you need to.
However, the hesitation mentioned at the beginning of the question may come from 2 sources: lack of knowledge of the system or poor decision-making process (what to do during the trade, where to exit). The second of these can only be dealt with once you have mastered the system very well.
The hesitation is a reaction of an intelligent person to the lack of preparation (a kind of defensive reflex).
You cannot fight it. Trading by force leads to hating what you do. The first thing is to prepare yourself very well. 95% of traders’ problems in the initial learning period are insufficient knowledge of the system.
We start with perfect mastery of one best setup (two at the most) and then move on to profitability. Entry — management — exit. Be a master at it. No more is needed.
Dariusz Swierk, PhD,
PS. You can find more about trading on NewCityTrader.com Make sure to check it out!