THE IMPACT OF FEAR
Fear is the flip side of greed—an intense desire to avoid loss. While a certain level of caution is essential for protecting capital, excessive fear can be just as harmful as greed.
Here's how fear often affects traders:
• Premature Exits: Closing positions too early at the slightest sign of a pullback, thereby missing out on potential gains.
• Paralysis by Analysis: Overthinking every trade to the point of inaction, missing profitable opportunities.
• Panic Selling: Dumping assets during market volatility, often at a loss, without regard for the longer-term picture.
Fear can cloud judgment, especially after a string of losses or during periods of high market volatility. It can cause traders to abandon well-tested strategies and make impulsive decisions driven by anxiety.
