There are the four many fears in trading, and how you can work to handle them. The one I am going to be talking about here is the fear of missing when stock trading. This crosses ever stock traders mind through the day.

Fear of Missing Out

Every trend always has its doubters, but I often notice that many skeptics of a trend will slowly become converts due to the fear of missing out on profits or the pain of losses in betting against that trend. The fear of missing out can also be characterized as greed of a sorts, for an investor is not acting based on some desire to own the security – other than the fact that it is going up without him on board. This fear is often fueled during runaway booms like the technology bubble of the late-1990s, as investors heard their friends talking about newfound riches. The fear of missing out came into play for those who wanted to experience the same type of euphoria.

When you think about it, this is a very dangerous situation, as at this stage investors tend essentially to say, “Get me in at any price – I must participate in this hot trend!? The effect of the fear of missing out is a blindness to any potential downside risk, as it seems clear to the investor that there can only be gains ahead from such a “promising” and “obviously beneficial” trend. But there’s nothing obvious about it.

We remember the stories of the Internet and how it would revolutionize the way business was done. While the Internet has indeed had a significant impact on our lives, the hype and frenzy for these stocks ramped up supply of every possible technology stock that could be brought public and created a situation where the incredibly high expectations could not possibly be met in reality. It is expectation gaps like this that often create serious risks for those who have piled into a trend late, once it has been widely broadcast in the media to all investors.

After stock trading for a long time I have put together some rules that I follow to help my trading along. These are only my suggestions with what has worked in the past.

Be patient. Once a trade is put on, give it time to work; give it time to insulate itself from random noise; give it time for others to see the merit of what you saw earlier than they.

Be impatient. As always, small loses and quick losses are the best losses. It is not the loss of money that is important. Rather, it is the mental capital that is used up when you sit with a losing trade that is important.

Never, ever under any condition, add to a losing trade, or “average” into a position. If you are buying, then each new buy price must be higher than the previous buy price. If you are selling, then each new selling price must be lower. This rule is to be adhered to without question.

Do more of what is working for you, and less of what’s not. Each day, look at the various positions you are holding, and try to add to the trade that has the most profit while subtracting from that trade that is either unprofitable or is showing the smallest profit. This is the basis of the old adage, “let your profits run.”

Don’t trade until the technicals and the fundamentals both agree. This rule makes pure technicians cringe. I don’t care! I will not trade until I am sure that the simple technical rules I follow, and my fundamental analyses, are running in tandem. Then I can act with authority, and with certainty, and patiently sit tight.

When sharp losses in equity are experienced, take time off. Close all trades and stop trading for several days. The mind can play games with itself following sharp, quick losses. The urge “to get the money back” is extreme, and should not be given in to.

When trading well, trade somewhat larger. We all experience those incredible periods of time when all of our trades are profitable. When that happens, trade aggressively and trade larger. We must make our proverbial “hay” when the sun does shine.

When adding to a trade, add only 1/4 to 1/2 as much as currently held. That is, if you are holding 400 shares of a stock, at the next point at which to add, add no more than 100 or 200 shares. That moves the average price of your holdings less than half of the distance moved, thus allowing you to sit through 50% corrections without touching your average price.

Think like a guerrilla warrior. We wish to fight on the side of the market that is winning, not wasting our time and capital on futile efforts to gain fame by buying the lows or selling the highs of some market movement. Our duty is to earn profits by fighting alongside the winning forces. If neither side is winning, then we don’t need to fight at all.

Markets form their tops in violence; markets form their lows in quiet conditions.

The final 10% of the time of a bull run will usually encompass 50% or more of the price movement. Thus, the first 50% of the price movement will take 90% of the time and will require the most backing and filling and will be far more difficult to trade than the last 50%.

This article was written by Mouser57 of StockHidoeut.com Penny Stocks Penny stock investing site to help members when buying penny stocks.

When it comes to the stock market, nothing is more profitable and/or volatile than penny stocks. Although it might seem easier to make bigger profits from Penny Stocks, it does involve a similar mentality as regular stock trading.
Over the course of an investing career, most beginners and even intermediate level traders will fall into the many traps of trading. If it happens that you see yourself falling into any of the “traps” below, understand that it’s natural to do many of them, but you must train yourself not to fall victim to them…
1. “Falling in love” with a stock, a company, a technology or a “story”
Often times, when beginner traders first start investing, they get caught up in the moment of trading. While it’s perfectly okay to enjoy the stocks you’re buying, and even like the company, any stock trading expert will tell you that getting too emotionally involved with the stocks you’re buying can kill your profits.
A company’s “story” might be important to know for long-term investing, but for short-term trading, falling in love with a company’s story isn’t a wise investing move. Especially for shorter-term investing, it’s important to do diligence on penny stocks before investing big.
2. Trading and picking stocks like if you were gambling on a casino
The second trap a lot of beginners fall into is to assume the stock market is like gambling, and to randomly invest in stocks. There are reasons why prices of stock go up and down, and the truth is, that a lot of beginner investors will invest like they’re gambling on a casino table… based on a matter of luck.
Expert traders will always look at graphs and charts to see why, and when to buy shares of stock. There are plenty of powerful software’s out there to help automate most of the research, but it’s important to understand that researching stocks first is a critical step.
3. Buying penny stocks that are pumped on message boards, spam emails and bogus hot stock tips
This happens more than we see, but when we read about “easy-money” from investing early in a new penny stock, it entices us to think that only a select few are buying. The reality is, the initiators of the “stock pump” are almost always the only ones to profit.
It’s always a wise move to avoid the allure of impulse investing in any stock being advertised in general. Do the research first…
And this leads us to the last of the “traps”.
4. Failure to control emotions
This one’s simple… don’t fall into the trap like most traders do of basing trades on emotions. Trading with out a strategy that clarifies when to buy and when to sell a stock is dangerous. In order to trade successfully over and over, you need to have clear buy and sell signals.