Fear of losing deposited money versus "made" money
I read somewhere that when investing in their retirement, people aren't afraid so much about having that investment go up and then back down, as much as they are afraid that they will lose some of the money they actually invested. So if my retirement account goes from $10K to $15K and then back down to $10K, then hey, nothing that *I* personally contributed is lost. But if I contribute $10K and it goes down to $8K, then "I've been robbed!" ... is it the same with trading perhaps? The first part is difficult because you're risking money you made in some other way, whereas later you're risking money you made through the "system" and it almost feels like the "house's money"? Not that this is a good way to think, but does it make it easier when you're risking money that you've taken out of the market instead of money you made in some other way?
No it shouldn't make any difference. Let me put it another way. The money I make trading is money I earned...blood...sweat...and tears. My advice is get to the point where you don't fear losing money no matter what it's source. But you hate losing it.
The following user says Thank You to eudamonia for this post:
i've felt the pain regardless of whether it was "house" money or "my" money ... in the end, it's still losing money ... and i'm not in this business to lose money (altho i understand that i will not win every trade).
The following user says Thank You to eman for this post:
This seems very beginner and I believe at odds with both behavioral finance and my observations during the financial crisis on friends 401k....My father made terrible decisions during the crisis even though if he had closed out at the worst time he would still have been up vs the money invested in his 401k.
To me the idea of "the house" money in trading is nonsense. When the trade closes and it is cleared in my account it is mine. It hurts just the same to lose it as if I "worked" for it or stole it.
The following user says Thank You to dutchbookmaker for this post: