Home Trading psychology The Fear of Losing Capital Grows As I Get Older

The Fear of Losing Capital Grows As I Get Older

I have day traded for about 12 years, doing swing trading some 5 years prior to that. And as the headline suggests my fear of losing increases as I get older. Why is that? I think it’s just natural. I know a lot more now than 12 years ago as my knowledge of the financial markets increases every year. I know the risks, I have had some really nasty losses once in a while. I thought I was experienced in 2004 when I had my first really good year. I was so wrong! Basically, all of my strategies from that year are randomized and gone. I still find it kind of hilarious when someone calls themselves experienced. No one is better than their last trade. The more I know, the more I know I don’t know. Yes, I might have more experience than most others, but I still learn something new every day. The markets are changing all the time and are very unpredictable.

And the more I know, the more respect I get for uncertainties. It comes with age and experience. Right now my day trading is quite good, but most likely due to a favorable market cycle for my strategies. It won’t last and hence I’m reluctant to increase size very much. If this happened 10 years ago, I would have traded a lot more size than I do today.

Young people tend to take more risks. As you get older, you get more risk-averse. And it should be that way, at least money-wise. If you do some bad calls financially when you are young, you have many years to repair the losses. That diminishes as you get older. I expect to retire in my seventies, and luckily still some 30 years left to that.  My risk-taking will diminish gradually until then. Imagine having invested much of your pensions in the stock market and you retired just after 2008…..


– Why does the fear of losing increase as traders get older?

The fear of losing tends to increase with age and experience in trading because, over time, traders gain a deeper understanding of the financial markets, become more aware of risks, and may have experienced significant losses. This accumulated knowledge and life experiences can make traders more risk-averse.

– Is trading experience a guarantee of success?

Trading experience is valuable but not a guarantee of success. Markets are constantly changing and unpredictable, and even experienced traders continue to learn and adapt. Success in trading is not about one’s past experience but about the ability to manage risk and adapt to changing market conditions.

– Why do young traders tend to take more risks?

Young traders often take more risks because they typically have a longer time horizon to recover from potential financial losses. They may have many years ahead to rebuild their portfolios, which can make them more willing to take risks. However, this risk-taking tendency tends to diminish as they get older and have less time to recover losses.