fbpx

I Missed Out on a Profitable Trade – The Fear of Regret

Take two scenarios: In scenario one, you are holding a long EURUSD position. You are considering to sell the position and go long JPY instead. In the end, you didn’t, Yen rises and you miss out on 50 pips of profit. In scenario two, you are long JPY. You sell your position and buy EURUSD instead. Had you held on to your long JPY position, you would have profited an extra 50 pips.

Which scenario would you feel more regret? Regret is the feeling of making the wrong decision, and it’s a feeling that traders of all levels experience.

A survey was taken with a similar situation and 92 percent of respondents said scenario two would yield more regret. Objectively speaking, both scenarios result in the same outcome. The difference is in scenario one, you already had a EURUSD position whereas in scenario two, you actively bought EURUSD, thus leaving a position that would have been more profitable. Scenario one was a passive approach, representing the majority of people’s decision making and scenario two is the exception. It seems that whoever doesn’t follow the crowd experiences more regret.

The fear of regret often make us act irrationally. To avoid this terrible feeling, we tend to take a conservative approach to decision making. Even the best fund managers will sell riskier positions or deleverage right before the end of the month (when performance fees are owed).

The fear of regret is why we hold on to losing trades, or don’t throw away things we no longer need. “Maybe I’ll want to use those old headphones again one day.” Marketing companies will use people’s fear of regret and combine it with the “last chance” or “limited time” offer. A museum advertises the retirement of a painting from an artist you never heard of. If you’ve never been interested in the artist before, why would you be inclined to see that particular painting today?

Don’t’ be fooled by so called “once in a lifetime” trading opportunities. The reality is opportunities will always be there. Longevity in trading is the key. If you make a trading decision, don’t second guess yourself. It will only lead to irrational trading behavior in the future.

No Comments

LEAVE A COMMENT

Your email address will not be published. Required fields are marked *

Recent post

JUNO MARKETS All rights Reserved.

Juno Markets Limited is incorporated in the Republic of Vanuatu with a registered address at Law Partners House, Kumul Highway, Port Vila, Vanuatu and regulated by the Vanuatu Financial Services Commission (VFSC) with a Principal’s License (No. 40099) for dealing in securities.

Juno Markets does not accept clients from certain countries/regions including the United States and Hong Kong. For a full list of restricted countries, please contact Customer Service.

Risk warning

Our services include products that are traded on margin and carry a high degree of risk to your capital. It is possible that you could sustain a loss that exceeds your initial investment. You should ensure you fully understand the risks involved and seek independent advice if necessary. Please read our full risk disclosure statement.

Juno Markets aims to deliver the best FOREX, CFD, AND METALS TRADING environment for traders WORLDWIDE. Juno Markets offers many PARTNERSHIP OPPORTUNITIES for INTRODUCING BROKERS, MONEY MANAGERS and WHITE LABELS, and our unique PARTNERSHIP PROGRAM helps IB’s grow their business through insightful data analysis and marketing support. We believe in bringing the best service, support and trading environment to FOREX, CFD and spot gold and silver traders GLOBALLY, allowing them to TRADE THE GLOBAL MARKETS on our METATRADER 4 PLATFORM. The Juno Markets MT4 platform offers unrivalled execution quality traders OF ALL LEVELS.

Processing...
Thank you! Your subscription has been confirmed. You'll hear from us soon.
ErrorHere