I have decided to post a weekly essay here on ET. After spending some time coversing with you folks, I feel that all of you can benefit from this. The ignorant and malicious are free to reveal themselves with replies that I will not acknowledge. The inquisitive and intellectually stimulated are invited to post constructive replies, and or questions. "Its what you learn after you know everything that counts." JW Marriott ENJOY... FEAR AND THE MARKET By Jai Ramoutar, Jr. There are many emotions that we as traders and market participants, must wrestle with in order to reach success in what we do. Now, I do not possess a license, certification or degree of any kind in psychology. However, I have personally managed to overcome many of the emotional obstacles, which erode and strip away our chances of becoming successful traders in each passing day, and helped many traders do the same. By far, the most damaging emotion is fear. Once a trader is overtaken by fear, their trading is now being led by that emotion, and those results can drive a traderâs self-esteem into the ground. If we donât recognize it, we start second guessing and looking in all the wrong places: commissions, strategy, scanning, basket, astrology, etc. Our fear can affect just about everything we do in trading: opening a position, managing a position, closing a position, etc, etc. Itâs almost as if âetherâ is being released from the trading screen and we become stupefied, euphoric and somewhat paralyzed. There are many more ways fear affects us. However, fear cost us the most amount of capital. What is fear? Why is it so powerful? Fear like any other âtrading demonâ must be acknowledged, looked right in the eye, fought and then ultimately conquered. Ok, fear means that weâre afraid of something. Letâs take a look at some of the things we fear or have feared. The boogieman, we believed that the boogieman was real, whatâs really interesting, is that we were never introduced to the boogieman and donât know what he looks like. Watching a scary movie, and feeling your heart pump faster as the squirming of the person next to you made you even more afraid, afraid of going to the dentist, buying the first piece of real estate, asking for a raise, telling someone how you really feel, telling someone you supervised that they were laid off, making your first trade, taking your first loss, taking your first profit, deep down inside being afraid to be successful, and so on and so on. Do you see whatâs going on here? What did we fear? We feared the unknown: - Boogieman: never saw him, but the name scared us - Scary movie: the music, the darkness, the director did a great job - Buying 1st piece of real estate: whatâs going to happen (what does happen) at the closing table - Asking for a raise: Never having asked before - Telling someone how you really feel: What will they think? - Telling a subordinate that theyâre laid off: Afraid of what theyâll say. Giving them terrible news - Making your first trade: âShould I be entering here?â - Taking your first loss: âShould I take this loss, or wait for it to come back?â - Taking your first profit: âMaybe I should hold on to it, itâs going become more profitable.â - Afraid of being successful: rising out of your mediocrity, leaving your comfort zone. What do all of these things have in common? The unknown. Once we have been through one of the events (except the boogieman), we realize that our perception alone created the fear. After we have experienced the reality, we rise to a higher level of understanding. If we have to return to any one of these events, we have fear, but now the fear is controlled and regulated by our new approach, then the fear becomes caution. Right? Iâve been through several real estate closings; at the end of each closing I am wiser, and better prepared for the next. At the end of each trade, I am wiser, more empowered and better prepared for the next trade. Since I am very honest with myself, I can take an objective eye and analyze exactly what I did wrong. If you followed and adhered to your entry and exits, and the trade didnât work, you did nothing wrong. There was one of two other factors that created the loss: first the trade was stopped out, and or two you didnât set the right entry and exit points. Thatâs easy: you need to go back to your determination of entry and exit points. To correct that you need to get the right education. The right education is the one that works best for your approach, strategy and timeframe. What is the other factor? The market. You canât control that and you never will. Losses are a part of trading and investing, and you must take the risk with the reward. Risk has a direct percentage relationship with reward. If you want low risk open a savings account with no more than $100,000 at an FDIC insured bank. Whatâs the reward there? Success is a journey, not a destination, as one of those motivational posters say. We will never be perfect, but if help the process, we will evolve. To achieve greatness, we must evolve. Again, Iâm not a psychologist; Iâm a trader and an educator. What I did learn is, there are some things we have complete control over, and many other things we canât control.