Hello trader,
I was probably 5 years old when a gorilla first scared me, running loose inside my grandparents’ home. Yes, I said a gorilla.
Later, the grim reaper threatened my preadolescent life. Another time, a scary old man came running and banging on the back sliding glass door while I played in the living room.
By the time I was 11, I had been startled by a menagerie of creatures, monsters, and demons.
I had seen my brother’s torso lying on a mad scientist’s table with his legs on the floor. I had been shown bullet holes in that same brother’s arm and told, “Quick, get in, he’s been shot!”
I’m fairly certain that for over a decade, every visit to my grandparents’ house included at least one prank or jump scare.
My uncle was (and is) the king of Halloween. He has owned dozens of masks, costumes, and tricks.
He has since progressed to creating hundreds of spooky props and decorations of his own design. They are mechanical masterpieces.
A skeleton wrestles its tibia away from a skeleton dog. A drinking pirate corpse sits nearby, and a skull peeks out from behind a tombstone.
When it comes to macabre innovation, he’s a genius.
I can admire all of that eerie craft now. At the time, honestly, it was psychological torture for my young sensibilities.
It didn’t take long before I expected to be frightened by whatever went bump in the basement.
As much anxiety as it caused, my brothers and I were very close. We adored our uncle.
He was fun and slightly chaotic. There was always something to see or do with him, and he always included us.
What began as fear became something we looked forward to and even sought out.
Halloween can be exciting and thrilling because we know the risk isn’t real.
Think about a haunted house or spook alley. We choose to go, we pay for the experience, and we walk in expecting relative safety.
We get hurt when we fail to recognize what counts as real risk.
Picture deciding the werewolf is real. You close your eyes, scream, and run straight into a brick wall.
Our overreaction does the damage. The werewolf never touched us.
Trading is like a haunted house, with one important difference. The risk in trading is real.
Money can be lost. That’s exactly why fear costs so much.
In a haunted house, fear can only make us run into a wall. In a trade, fear can push us to risk more than we planned and hurt our results.
We pay to enter the market. It can certainly be thrilling.
If we understand our risk before we walk in, we can follow the predetermined path.
Even when price action throws a jump scare, we don’t panic. We don’t change the plan, and we don’t go running.
When we react to fear, we can do real damage. We change our rules, exit at a bad spot, or risk more than our initial setup allowed.
We defined the risk in advance. Reacting to the fear turns it into something bigger.
Volatility is the werewolf. A widening spread is the vampire.
Neither deserves your fear. News headlines and tweets are just jump scares that shouldn’t change your behavior.
Before your next trade, review the trade and your rules.
Know your entry, your stop, your size, and your exit before you walk through the door.
Write the path down while you’re calm. When something jumps out of the dark, you’ll already know where you’re going.
Don’t let unnecessary fear make your decisions for you.
Blake Young
Senior Market Strategist, TheoTRADE
