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You have probably heard professional traders warn about trading with ”scared money.” 

Why is trading so scary?

   

The following information on Trading Psychology is the life work and passion of Dr. Kenneth Reid.  Kenneth is a practicing psychotherapist, trading coach and trader. He also works as a Senior Analyst and Editor for three national stock market newsletters with thousands of subscribers. He has appeared on CNBC and written for Forbes.com and SmartMoney.com.

 

This page describes Scared Money, which is a natural human condition made much worse by Aversive Conditioning & Random Rewards. Follow the links to read about the other causes.

 

SCARED MONEY 

You have probably heard professional traders warn about trading with ”scared money.” According to Mark Douglas, writing in The Disciplined Trader:

“In the market, the fear of losing one’s fortune is every bit as intense as the fear of losing one’s life from an attack by a wild animal. I don’t think I could put the difference between consistent winners and everyone else more simply than this: The best traders aren’t afraid.”

Why is trading so scary? Neurofinance has the answer.

NEUROFINANCE
Neurofinance is a new scientific niche that studies the relationship between the brain and money. We now know that trading activates the same primitive centers in the brain that are responsible for self-preservation. That is very bad news because these are the more archaic emotional and defensive layers of the brain (principally managed by the amygdala), which do not respond to will power or ordinary self talk. In fact, the brain is hardwired to prevent you from tinkering with its fear circuits, its core defensive and reactive processes.

Why? These processes, such as fight, flight and freezing up, have great survival value in life threatening emergencies. But, when these ancient parts of the brain are in control of your trading, you will automatically do the opposite of what you consciously intend. It feels like self-sabotage, but it is not diabolical, it is biological. It is just the instinct of self-preservation taking control.  

Have you ever tried to extinguish an instinct? It is virtually impossible to do on your own. This is one reason why so many traders underperform and eventually fail.

Moreover, there is a gene pair for “jumpiness,” which makes some people much more sensitive to loss or missing out than others. There is also a gene pair for having a cool head. And, there is a gene pair for being in the middle, i.e. moderately reactive.

Accordingly, where one initially falls among the Three Types of Traders (aspiring, breakeven and winning) is at least partially genetically determined.

The good news: Regardless of your genetic code, it is definitely possible to reduce trading fear to manageable levels.

Winning traders are not afraid. Normal human instinctual fear, which may be worsened by your genetic makeup, will interfere with trading success because it will make you more reactive to the randomness in the market. To eliminate self-sabotage, you have to reduce your fear to manageable levels. You can’t trade well with a scared brain.

 

BOTTOMLINE: To trade successfully, you need to reduce fear to a level where it is healthy, i.e. you respect the reality of risk, but your judgment and behavior are not impaired by fear.My FREE Risk Profile is one way to evaluate your susceptibility to fear.  My coaching program is focused on reducing fear so you can trade rationally.

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If you take no other action today my friend, be sure you order my premier neuroprogramming MP3 ACCESSING THE WINNING TRADER’S MINDSET for just $99. Nothing is more important than becoming proactive about your mental-emotional state while trading. It could save you thousands!