| In this article I want to examine the usefulness of | | | | respect. It helps keep us humble and focused on our |
| the metaphor of trading as combat to see what | | | | risk management. |
| kinds of insights we can discover. I think you will find | | | | Another useful technique for managing fear is to |
| that it is a very useful metaphor provided you do not | | | | name it. By moving in the direction of the feeling of |
| carry it too far. | | | | fear and putting a face and a name on it, you give |
| Some of the most powerful aspects of combat are: | | | | yourself a handle with which to manage it delivered |
| fear, surprise, uncertainty, violence, consequences of | | | | late. |
| failure, coordination, stress, leadership and emotional | | | | By starting with the smaller aspects of the source of |
| fatigue. Each of these aspects can easily be found | | | | fear and learning to manage it carefully, you will soon |
| inside the trading arena. I want to look more closely | | | | desensitize yourself to its paralyzing aspects. |
| at fear in this article, because it is so powerful and | | | | You will no longer feel the panic reaction when the |
| pervasive. | | | | environmental cues trigger the feeling because you |
| Fear: it will freeze you in place when it's time to act | | | | will have the confidence to know that you can |
| or it can prompt you to act when you shouldn't. You | | | | manage it. |
| will cloud your judgment so that you go left when | | | | Your effective risk management strategies will |
| you should have gone right and will cause you to | | | | ensure that you don't trade too large or too often. |
| question your own best judgment. Even the best laid | | | | Your risk management will keep you from exploding |
| plans, founded on the soundest principles of | | | | and this can reduce an important source of your |
| deliberate planning, may unravel when an unhealthy | | | | fears. |
| dose of fear is applied. | | | | Trading with relaxed money, which is another way to |
| Facing fear, either directly or indirectly, is the first | | | | say of being well capitalized and staying within your |
| step in mastering this powerful emotion. The best | | | | risk profile should also help reduce the source of |
| way that I know to manage fear as a trader is to | | | | some of your fears. |
| reduce your position size until you can trade at a | | | | Finally, learning how to manage conditions of |
| level that allows you to operate with nervous energy | | | | uncertainty will take away some of the nervousness |
| but not outright fear. | | | | associated with uncertainty. |
| No matter how effective and experienced you are, I | | | | Learning to recognize, acknowledge. manage and |
| think fear is an element of our trading all-time and | | | | co-exist with fear will help you move beyond it to |
| one that we should therefore acknowledge and | | | | your next trading challenge. |