how to deal with the fear of missing out ???
we should take a trade after a close of the candle because institutions might trap traders
but also if we wait till candles close we might not get the best RR trade (i.e. planning for 1:2 trade might end up with 1:1.5)???
so any idea on how to deal with this???
how to deal with the fear of missing out ???
When prices are rallying, the urge to get in the trade and that FOMO feeling is natural. Only way one can curb this feeling is by being desciplined, which is hard to attain but it is the most important aspect of traders strategy.
Start seeing things practically and you will be able to control your emotions in such situations.
Taking your above example, you simply want to jump into the trade for the sake of 1:2 RR, despite very will knowing that it might be trap and mostly it won’t work (say 8 out of 10 times it won’t), rather see things with rational perspective, by being desciplined you can earn 1:1.5 RR and say you do this for only 5 out if 10 trades, even though your RR is lesser but by being desciplined you can do much better compared to giving into the feeling of FOMO.
Give this a read, the topics that are touched in this newsletters are really interesting.
As Shubh pointed out, it’s our basic human nature and I can very well say that it has led me to losses on most days when I have entered after the prices have rallied up or taken trade just because I have wanted to… There are say only very few days (even 5% and less) when prices rally too much or are sustainable well beyond some point and if you have gotten in other of the day’s, chances are you would be left hanging.
Not entirely and most of the times it depends on the share you are trading and it’s past behavior. For illiquid share’s everything depends on the volume and where you are getting in, if you got in early it’s depends if the rally would sustain (you don’t know before hand that it would) and if you wait sometime and enter later then very little is left of the rally to actually take something of it…
I would say I just feel like puking when I hear this said again and again. It’s basic supply and demand game, fear and greed and if we are wrong in our assumption and are at the opposite (loosing) end of the trade it’s definite that we feel cheated.
Well RR is plan bullshit if you ask me. What one should focus is the perfect trade/setup and SL should be there just for protection. And just say you get in the trade and feel like it’s not going your way or you see the charts do opposite, Do you wait for your SL to hit? No, Never. Just exit and book loss, where your proposed loss would be say R and if you get our earlier it would save you over 80-90% of your risked capital.
You will get this after taking lot’s of different trades, during different market situations.
Just a trade I took today for perspective. I placed my buy CO order at 31.45 and prices moved .10 - .20 paise without giving me a fill, only 10 Quantities were filled of my 40k order. I normally watch the snap quote for sometime before pacing my order but in this case I didn’t, see there were over 30-35k order in each level on both sides but just after I placed my order prices moved drastically without taking out all the order in each price level, a classic case of dummy orders.
Since prices had already move .15 paise and I was already sitting at unrealized loss as my order had not got filled at my desired level of 31.45. I had two option to either get exit both legs of the trade and realize charges (100rs or so) or buy at higher levels which would already cost me more. I decided to do otherwise, I moved my buy order some ticks below at 31.25 and as I had assumed prices started receding slowly without much apparent volume. When there were sufficient offers at 31.55 I changed my buy price to 31.55 and my entire order got filled at that price. I waited some time and exited at the next big candle when snap quote prices were around 32 and there was ample volume at the buy side but as I have said most of the orders were dummy orders and my exit order were filled at 31.79 (and also since CO exit order are market)
Also if prices had not moved my way and had receded just to 3.30 -31.35 I would have exited the trade, irrespective of the SL.
Looking at hindsight even I would say why didn’t I wait longer? Believe me my trading style gives me anxiety even when I sleep but in most cases sticking to what one does best is important.
Here’s another trade I took today. I am such a panicky trader that once the price moved below my purchase price I was about exit and look elsewhere but I held on and exited at the next opportunity without waiting.
So in all the trade’s you take or are going to take, the mental status of holding on to that trade depends entirely on where you have entered the trade. Also the Risk allocation increases manifold if you enter later and the RR get skewed against you in most of the cases if the script is volatile. Everything basically comes to what’s going on upstairs and how much flexible or adamant you are in your profit/loss targets.
thankyou for your response @Gautam