It happens that traders are stuck in the face of some event in the market. I had this, which led to the loss of the first deposit. After many years, I remember like it was today: I set the trend line on the GBP/JPY and set order of what I thought was right over it. It was a Sunday evening – in a moment the market was about to open. It happened in a moment. For an hour I was watching as it is slowly but steadily moving towards my trend line, then touches it….
Suddenly, to my surprise I saw that my order was activated ! It was not how it supposed to be! It had to start only after breaking the line – and on the chart it touched her perfectly!
There were emotions, stress and… I was stuck. I just did not know what to do. Helplessly I was watching as within a few minutes the market is falling down. Over my head flew dozens of thoughts. I was not able to make even the slightest move. I froze with emotions like an animal blinded at night on the highway by the car reflector.
It was my beginnings, absolute beginnings. I knew that there is something like SL but no thought was necessary, I was finally here to make money and not lose it, and “the market always turns!”. This time it didn’t and I had the first margin call. I was surprised and then broken down.
A colleague, in a similar situation, watched how in 9 minutes six thousand US dollars evaporate from his account, earlier he tripled account (like me at the beginning), he said that he was not able to do anything.
How to deal with such situation, when suddenly we are surprised and “stuck”?
3F Reaction: fight, flight or freeze in trading
In situations of very strong stress we have 3 types of natural reaction of the body. Let’s call them “3F”.
3F is: fight, flight or freeze.
These are appropriate reactions to all living beings. The first two are well known: the living beings in the face of threats (e.g. aggressor) flight, take the fight or freeze. It is a survival mechanism, deeply encoded in the genes.
However, in the market situations, as shown the above stories – it is rather an adverse reaction. Dealing with this in such situation consists of two elements:
Prevent „freeze”. First, prepare yourself mentally for what might go wrong. Prepare for it, the order can activate differently than you want (here I mention that I so quickly went live, that I often mistaken shorts with longs), is not the place where you want.
Electricity can go off (of course it makes sense to have a standby power supply so-called UPS). There may be a sudden huge move because of the news (also I had such a case, I entered without checking the calendar news …), etc.
Knowing a few possibilities of “what could go wrong,” you are in a different situation, the chances that something surprising will happen and you “stuck” rapidly decrease.
Expect the unexpected. And when it happen make a rapid assessment of the situation and be ready to take immediate action.
If you already think about what you would do in such a situation you have a good chance that it will work properly. And you won’t be found unprepared. And the situation does not finds you with your pants down.
Stop the reaction. If you see someone in such a situation, shout loudly, or if you stand close – push him, it is usually enough. In relation to yourself, use the same: shout loudly, use the “universal words,” get up rapidly from the computer. Any loud or rapid activity break state of “stuck” and will unlock your mind. Clapping your hands loudly works well.
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