(Video: Market coach Doug Hirschhorn, PhD, discusses what it is that really motivates traders on Wall Street.)
Today I'm here to tell you the age-old belief that greed moves the markets is just plain wrong. There is only one thing that moves the market: fear. Whether it’s a fear of losing money or a fear of missing out on making money, the simple fact is that fear is the main driver for traders.
Here are 3 ways to move beyond your fear:
- Get over yourself As a trader, you need to accept the reality that you are always missing out on some trade somewhere. The markets were here long before you began trading and will be here long after you’ve retired to your quiet little island getaway.
- Know your strengths Instead of chasing current hot markets (commodities) or styles (technicals) know what your competitive advantage is and stick to it.
- Know your job Contrary to popular opinion, a trader's job is not to make money. That’s the market’s job.
Rather, your job is to do the following:
- Figure out your competitive advantage.
- Execute that advantage when it appears.
- Manage risk as the market moves.
Do your job and you won’t have to worry about chasing the market because you're afraid to miss out.
Think better, invest smarter.