Growing Forex Diary
Danger : Accumulating Loss makes Margin Call
Saturday, September 29, 2007 - - 1 Comments
I would like to share and discuss here about the questioner which I took one month before, and this is the vote result.
Which one is most difficult ?
Floating your loss 17%
Floating your profit 29%
Cut your loss 35%
Closing your profit 17%
Floating your loss 17%
Floating your profit 29%
Cut your loss 35%
Closing your profit 17%
Quite surprising result, the fact is most traders are still afraid to cut their loss than floating the profit or closing the profit. Actually I also see some people can stand with hundreds minus result and can’t stand to close their profit.
Let’s learn about how our brain works with money fear taken from By Jason Zweig, Money Magazine senior writer/columnist (Your money and your brain) :
1. Which is riskier: a nuclear reactor or sunlight?
2 .Which animal is responsible for the greatest number of human deaths in the U.S.? a) Alligator b) Deer c) Snake d) Bear e) Shark
Now let's look at the answers. The worst nuclear accident in history occurred when the reactor at Chernobyl, Ukraine melted down in 1986. Early estimates were that tens of thousands of people might be killed by radiation poisoning. By 2006, however, fewer than 100 had died. Meanwhile, nearly 8,000 Americans are killed every year by skin cancer, commonly caused by overexposure to the sun.
In the typical year, deer are responsible for roughly 130 human fatalities - seven times more than alligators, bears, sharks and snakes combined. Deer, of course, don't attack. Instead, they step in front of cars, causing deadly collisions.
None of this means that nuclear radiation is good for you or that rattlesnakes are harmless. What it does mean is that we are often most afraid of the least likely dangers and frequently not worried enough about the risks that have the greatest chances of coming home to roost.
We're no different when it comes to money. Every investor's worst nightmare is a stock market collapse like the crash of 1929. According to a recent survey of 1,000 investors, there's a 51% chance that "in any given year, the U.S. stock market might drop by one-third."
In fact, the odds that U.S. stocks will lose a third of their value in a given year are around 2%. The real risk isn't that the market will melt down but that inflation will erode your savings. Yet only 31% of the people surveyed were worried that they might run out of money during their first 10 years of retirement.
Fear: The hot button of the brain
Deep in the center of your brain, level with the top of your ears, lies a small, almond-shaped knob of tissue called the amygdala (ah-mig-dah-lah). When you confront a potential risk, this part of your reflexive brain acts as an alarm system - shooting signals up to the reflective brain like warning flares. (There are two amygdalas, one on each side of your brain.)
The result is that a moment of panic can wreak havoc on your investing strategy. Because the amygdala is so attuned to big changes, a sudden drop in the market tends to be more upsetting than a longer, slower decline, even if it's greater in total.
So… we as a forex trading don’t realize with a slower decline of our margin because of our uncontrolled emotion and money management can caused margin call next day. But we seemed that afraid with one big surprise loss than the accumulation of the smaller one, and that’s our normal brain if in panic situation.
Let’s try to admit and wise to control our stop loss, cutting the loss as minimal you can do is safer and secure than waiting for small latent margin call situation. Trying to manage the margin to get profit after the loss is very important as a profitable trader.
Tame your brain and manage your brain to facing money is very challenge effort for traders (you can read the article before in the blog about 8 ways to tame your brain). But will protect you as a profitable profit not as a contributor fund to your broker again and again until you feel desperate. Keep try traders !
Bahaya Laten : Akumulasi Loss menyebabkan Margin Call
Let’s learn about how our brain works with money fear taken from By Jason Zweig, Money Magazine senior writer/columnist (Your money and your brain) :
1. Which is riskier: a nuclear reactor or sunlight?
2 .Which animal is responsible for the greatest number of human deaths in the U.S.? a) Alligator b) Deer c) Snake d) Bear e) Shark
Now let's look at the answers. The worst nuclear accident in history occurred when the reactor at Chernobyl, Ukraine melted down in 1986. Early estimates were that tens of thousands of people might be killed by radiation poisoning. By 2006, however, fewer than 100 had died. Meanwhile, nearly 8,000 Americans are killed every year by skin cancer, commonly caused by overexposure to the sun.
In the typical year, deer are responsible for roughly 130 human fatalities - seven times more than alligators, bears, sharks and snakes combined. Deer, of course, don't attack. Instead, they step in front of cars, causing deadly collisions.
None of this means that nuclear radiation is good for you or that rattlesnakes are harmless. What it does mean is that we are often most afraid of the least likely dangers and frequently not worried enough about the risks that have the greatest chances of coming home to roost.
We're no different when it comes to money. Every investor's worst nightmare is a stock market collapse like the crash of 1929. According to a recent survey of 1,000 investors, there's a 51% chance that "in any given year, the U.S. stock market might drop by one-third."
In fact, the odds that U.S. stocks will lose a third of their value in a given year are around 2%. The real risk isn't that the market will melt down but that inflation will erode your savings. Yet only 31% of the people surveyed were worried that they might run out of money during their first 10 years of retirement.
Fear: The hot button of the brain
Deep in the center of your brain, level with the top of your ears, lies a small, almond-shaped knob of tissue called the amygdala (ah-mig-dah-lah). When you confront a potential risk, this part of your reflexive brain acts as an alarm system - shooting signals up to the reflective brain like warning flares. (There are two amygdalas, one on each side of your brain.)
The result is that a moment of panic can wreak havoc on your investing strategy. Because the amygdala is so attuned to big changes, a sudden drop in the market tends to be more upsetting than a longer, slower decline, even if it's greater in total.
So… we as a forex trading don’t realize with a slower decline of our margin because of our uncontrolled emotion and money management can caused margin call next day. But we seemed that afraid with one big surprise loss than the accumulation of the smaller one, and that’s our normal brain if in panic situation.
Let’s try to admit and wise to control our stop loss, cutting the loss as minimal you can do is safer and secure than waiting for small latent margin call situation. Trying to manage the margin to get profit after the loss is very important as a profitable trader.
Tame your brain and manage your brain to facing money is very challenge effort for traders (you can read the article before in the blog about 8 ways to tame your brain). But will protect you as a profitable profit not as a contributor fund to your broker again and again until you feel desperate. Keep try traders !
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Bahaya Laten : Akumulasi Loss menyebabkan Margin Call
Cukup mencengangkan hasil questioner yang saya ajukan satu bulan yang lalu, di mana pada kenyataannya masih banyak trader yang takut untuk mengambil keputusan menutup posisi loss daripada membiarkan profit berjalan. Saya juga sering membaca banyak trader yang lebih bertahan dengan ratusan minus dibandingkan bertahan dengan puluhan point profit.
Dari artikel mengenai bagaimana cara otak kita bekerja terhadap uang dapat disimpulkan bahwa manusia lebih tidak menyadari bahaya kecil yang berkesinambungan dibandingkan dengan satu kejadian yang langsung membahayakan diri mereka. Dalam forex pun demikian, banyak yang tidak menyadari penurunan margin semakin hari karena tidak adanya kontrol emosi dan management resiko akan menyebabkan margin call pada akhirnya. Tetapi sepertinya kita lebih takut kepada kejadian Margin Call yang besar-besaran dari satu posisi dibandingkan akumulasi dari beberapa kekalahan yang ada. Otak kita senantiasa bekerja dalam kepanikan jika terjadi hal tersebut.
Mari kita mengakui dan bijaksana untuk mengatur stop loss kita, menutup kerugian seminimal mungkin lebih aman daripada harus menunggu bahaya latent yang tersembunyi setelahnya. Memelihara margin sangat penting untuk kembali mencari keuntungan.
Menjinakkan otak Anda dan mengatur otak Anda dalam menghadapi uang adalah tantangan bagi trader tersendiri (Anda dapat membaca artikel sebelumnya dib log ini mengenai 8 cara menjinakkan otak Anda). Namun hal ini akan melindungi Anda terus sebagai trader yang profit, bukan sebagai penyumbang rutin bagi broker Anda sampai Anda merasa putus asa.
Dari artikel mengenai bagaimana cara otak kita bekerja terhadap uang dapat disimpulkan bahwa manusia lebih tidak menyadari bahaya kecil yang berkesinambungan dibandingkan dengan satu kejadian yang langsung membahayakan diri mereka. Dalam forex pun demikian, banyak yang tidak menyadari penurunan margin semakin hari karena tidak adanya kontrol emosi dan management resiko akan menyebabkan margin call pada akhirnya. Tetapi sepertinya kita lebih takut kepada kejadian Margin Call yang besar-besaran dari satu posisi dibandingkan akumulasi dari beberapa kekalahan yang ada. Otak kita senantiasa bekerja dalam kepanikan jika terjadi hal tersebut.
Mari kita mengakui dan bijaksana untuk mengatur stop loss kita, menutup kerugian seminimal mungkin lebih aman daripada harus menunggu bahaya latent yang tersembunyi setelahnya. Memelihara margin sangat penting untuk kembali mencari keuntungan.
Menjinakkan otak Anda dan mengatur otak Anda dalam menghadapi uang adalah tantangan bagi trader tersendiri (Anda dapat membaca artikel sebelumnya dib log ini mengenai 8 cara menjinakkan otak Anda). Namun hal ini akan melindungi Anda terus sebagai trader yang profit, bukan sebagai penyumbang rutin bagi broker Anda sampai Anda merasa putus asa.
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