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rxs0005

Gun Shy Cant Pull the Trigger

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Hi, Natedredd10: You said, "Faith is super important..." I agree with you. Lack of faith in their system seems to be a big issue for many traders, and results in hesitating to get in, then once in a trade, getting out too soon. For those whose systems have a high win/loss ratio, developing faith can be relatively easy. For those with potentially profitable systems, but with win/loss ratios closer to 50-50, faith may be a hard won commodity.

 

Many traders have a personal rule that after losing so many pips on a given day (or percentage) or having so many losers in a row, they stop trading. Obviously, from a statistical point of view, this is a formula for ruining your win/loss ratio. Most traders stop because they are so emotional frayed at that point that they feel they can't, or shouldn't, continue trading.

 

My mentor taught me that if you have a losing trade, you must always take the next trade that meets your criteria. The market moves in cycles of trends and consolidation. If you stop trading, you miss the next payout cycle. But psychologically, if you don't take the next trade, you miss learning at a gut level that if you stick with it, your system does work.... and you can have faith in it. And at another level, you miss developing the psychological muscle to do the heavy lifting. In other words, you never develop an effective strategy to manage the strong emotions of trading.

 

Taking the next trade, and the next trade, and the next trade can be tough until you develop faith in your system. One of the best ways to do this is to reduce the overall size of your trades so that a series of losing trades doesn't trigger the same level of emotion distress. This makes it is easier to see it through to the payout cycle and, thus, easier to develop full confidence in your trading system. Once you have solid faith in your system, then increase your trade size gradually, a step at a time, until you are back up to your normal size. If you find that you start to do any of the things that indicate that you aren't trusting your system (hesitating to get in, getting out too soon, etc.), decrease the size of trades again for a while.

 

P.S. In all the above, I'm assuming that you do have a system that works: that you have backtested and know what the win/loss ratio is, and that you have clear criteria for entry, stop placement, and taking profit.

Edited by FXGirl

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One of the best ways to do this is to reduce the overall size of your trades so that a series of losing trades doesn't trigger the same level of emotion distress. This makes it is easier to see it through to the payout cycle and, thus, easier to develop full confidence in your trading system. Once you have solid faith in your system, then increase your trade size gradually, a step at a time, until you are back up to your normal size. If you find that you start to do any of the things that indicate that you aren't trusting your system (hesitating to get in, getting out too soon, etc.), decrease the size of trades again for a while..

 

There is always talk of reducing size, but for most of us who are learning, and, I would guess, many who are successful, they are only trading one or two contracts anyway.... I dunno...can't get any smaller than that...

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Hi, JEH: Yes, if you can't reduce your lots or contracts, it makes it tough to try out this strategy. The only alternative is to go back to a demo for a while. Of course, you don't have the same emotional response as when there is real money on the line, but trading in a demo may still be a help.

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There is always talk of reducing size, but for most of us who are learning, and, I would guess, many who are successful, they are only trading one or two contracts anyway.... I dunno...can't get any smaller than that...

 

Actually you can reduce your trading size.

 

Switch to ETFs that mimic the futures.

IWM for TF (1000 shares = 1 contract)

SPY for ES (500 shares = 1 contract)

USO for CL (2000 shares = 1 contract)

GLD for GC (1000 shares = 1 contract)

 

The above equates the size of the move in $ for the two instruments (shares vs contracts) in a given timeframe

 

If you trade only 100 shares in each ETF, commisions will take a large portion of your profits and can even cause you to end up with a loss compared with trading futures but this is a good way of training with live ammunition so to speak.

 

The only problem with switching to ETFs is that you need an account of at least 25,000$ because of the PTD (Pattern Day Trader) rule.

 

Gabe

Edited by Gabe2004

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Hi

 

i need some advice i have been paper trading on a strategy i have had quite a decent success with about 76% wins

 

 

but i just cant seem to pull the trigger in the real market

 

what do i do

 

 

thanks for your advice

 

cheers

 

rxs0005

 

Sounds like your operating in a state of fear, we all know that successful trading is about eliminating emotion from your decision making.

 

You should try these links:

 

Mark Douglas August 2005

 

Mark Douglas June 2005

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bottom line, JUST DO IT...

 

effectively your instinc is to not fail and protect- your heart says one thing your mind the other... THINK WITH YOUR HEAD NOT HEART. the lump in your throught goes away and you can focus on your plan. the entry comes up say aloud thats a GO ! and press that damn button... then your focus is on stops and levels for exit... hell you should be able to get up and walk around grab a coffee etc.. relax and let your system do the work... you must realize you cannot do anything you must allow the market to give to you or take ... good management and allocations will provide you with sound exits and entries

 

good luck

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"we all know that successful trading is about eliminating emotion from your decision making." - JayKay71

 

There is no such thing as eliminating emotion from trading; there is only learning to deal with your emotions in a way that supports your trading goals.

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My problem - I am actually picking the market really well. ...; rather than being gun shy I am being trigger happy....and hence getting chopped a little too much (the obvious reversal advice from just do it to just stop doing it might be all its needed) however I would be interested in what others do to curb this horrible horrible affliction.

i can tell... i kinda suffered a lot from the very same condition...

 

1. define it in details. pride and greed/practicality... greed is why you trigger too early - why should u give up few ticks, you know u r always right ;) pride makes you hold on the losing trade saying - you cant be wrong, it is just a chop.

 

2. tell urself - i dont want a trouble sitting through the chop. markets arent bound to move my ways they can turn on a blink of an eye. i want to jump in when market made a decision and the move is imminent, i am ok to pay couple of ticks for comfort and dry shirt

 

it works. i now can slip once in a while and jump earlier than i really wanted but if it starts to chop i am immediately get alerted and am looking to exit with 1tick profit or breakeven and then to enter again as i had to not as my ego/greed tells me..

 

in short - name the root of the problem and extract it methodically.

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the root of the problem....

 

thats an interesting one,

a combination.....

fear of missing a trade - yes.

Laziness of not wanting to focus on sitting in front of the screen all day for a few ticks.

greed of trying to extract too much from every trade.

 

answer - either define setups better, however isn't the holy grail?

or with further analysis of what I was actually doing - it was the classic of getting chopped up with stops that were too close, as what I was wanting to achieve did not match with what I was doing

(coming form a longer term perspective to more intraday trading)

 

Answer - widen stops, reduce intraday trading - focus more on what I was trying to capture - the bigger picture.

Mainly because on analyzing what it is i am trying to achieve.

 

As a side note - the systems these days are pretty good and with DOMS etc; encourage you to trade more (if not too actively) This is entirely not necessary if you are not day trading. It only benefits the brokers, a bit like sticking a drink in front of an alcoholic and saying come on, use your discipline and not take a drink..... easy answer is to not use the system if you dont need to.

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reminds me of an old saying

 

"The first step in a 1000 mile journey is the hardest"

 

Try and work out WHY you have a fear.

If its just about stepping into the unknown, then there is no other answer but to just jump and pull the trigger.

If its about the fear of loosing. Then you need to understand the probabilities behind the strategy and remind your self that losses ARE inevitable.

As a suggestion just buy and sell a few times on something liquid, whereby you will pay a little bit of brokerage, and cross the spread - take a small loss and just get into the vibe of the thing ( reference The Castle - an Australian movie from about 8 years ago)

 

This was a great response. From your original post, you've stated that you've taken the steps to backtest a system to over 70% profitability. That's great. It also puts you ahead of the majority of traders since many dont have a system to even backtest. So as the above poster stated, you now have to address the fear.

  • fear of losing
  • fear of the unknown
  • fear of being wrong
  • and yes, even the fear of being right

 

Find out what your true fear is and address. Trading is not for the faint of heart. Until you have discipline and control of your emotions, you're doomed to fail. Sounds like you have the discipline in your system. Next up - your emotions.

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Dear Shy Guy: All the advice given here, reduce your lot size, recognize that losses are a part of trading, develop faith in the probabilities of your system, and ‘just do it’, are all good suggestions.

 

But what I heard you say was that you are afraid that you might be wrong and that would mean you are stupid and you would feel like a fool.

 

If you had a way to deal with the internal dialogue telling you that the market might prove that you are stupid, and you would hate feeling that way, any of the above suggestions would work for you – and you never would have started this thread. But until you deal with what is generating the internal dialogue, you will probably struggle with implementing any of this good advice.

 

Right now, your strategy for dealing with the emotions you feel is to avoid taking a trade. That is a strategy that works – emotionally. If you don’t take a trade, you won’t feel like a fool, and the market can’t give you any evidence that you are stupid. But this strategy doesn’t work if you want to become a successful trader. You have to develop a new strategy for dealing with your internal dialogue and the emotions it generates.

 

First, talk out loud. Get what you are saying internally out in the open where you can examine it. Writing it down will work too. You may be surprised to find that there is quite a lot you’ve been saying to yourself. You need this information to understand what is happening in your trading. Once you know what you are saying to yourself, ask, “Have I heard those words before?” “Is it my voice I’m hearing or is it someone else’s voice?”

 

If this dialogue is something you haven’t heard before and it is in your own voice, then most likely it is trading specific and you can deal with it fairly easily. This is the place where we need feedback from you. Tell us what you found out about your dialogue. But in any case, be sure you ask yourself these questions: “Is there something about my strategy that I’m not fully comfortable with?” and “Do I, and the people who depend on me, have realistic expectations about how long it takes to become a successful trader?”

 

If the dialogue is something you have heard yourself say before, ask, “What is it about trading that triggers this dialogue?” and “Is it true?” Then give us your feedback and we’ll go from there.

 

If the dialogue is something you have heard before, especially if you have heard it all your life, and it isn’t in your voice, then you have a bigger issue and will need to deal with it before for you can reasonably expect to be a successful trader. If you don’t, it will continue to interfere with your trading in surprisingly negative ways. Although it is certainly possible to deal with this on your own, generally, you can make much faster progress with a little help. Look for a psychologist, someone with a PhD who specializes in brief therapy or cognitive behavioral therapy – there are a few good ones out there. Feel free to interview them before deciding whom to work with.

 

In the meantime, while we are waiting for your feedback, I want you to know these things:

 

The market makes fools of us all - we are all wrong on occasion. We were wrong a lot in the beginning; now it's better.

 

Though smart helps, trading the market is more about persistence than it is about being smart.

 

Trading is the grandest game out there – but that’s what it is, it’s a game. It isn’t who you are.

 

Yours,

Dr. FxGirl

 

FxGirl,

 

This is one of the best posts I've ever read in a trading forum in over 5 years.

 

Thanks!:)

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An interesting thread, to say the least. However, I'd like to ask if anyone has ever heard of, or experienced, a fear of success? I seem to have this problem. I trade pennies and pink sheet stocks but it seems I am averse to making the substantial profits that trading these stocks can return, sometimes in minutes. I have very good technical abilities but I have a problem in transferring this ability to stock picking. BTW, I don't have a fear of losing as that's what I've been doing for most of the past two years.

 

TIA for all replies.

 

trader.jeff

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To rxs0005

 

This is a most common fear in trading and can be conquered with work. Our brain is organized around fear -- this is its nature. The problem is that your brain can't tell the difference between fear and uncertainty. Until you can emotionally regulate the fear impulse, you will not be able to seperate fear from uncertainty (and become a successful trader). This uncertainty will show up as thoughts in your mind that I call the historical internal dialog. This is how you can learn to be mindful of your self limiting beliefs -- they appear as an internal struggle in your thought life.

 

There is always an Inner Critic that criticizes and judges your performances as if they were a reflection of your worth. Then you will find a fearful, child like, part of the self reacting to the internal criticism. You will experience this as the inability of pulling the trigger. With regulation of the fear, you can go beyond this fear and find much more empowered inner resources than the fear. You will find discipline, patience, courage, and confidence. These are just as real as the fear you experience. But the fear blocks the potential to access these parts of the mind. They are there, but you have to know how to emotionally regulate the fear first, distinguish it from uncertainty, and then re-organize the internal dialog so that it expresses the empowerded parts of the self within the mind, rather than the self limiting beliefs. Trading becomes a way to develop the self. It's a journey into your potential. You have to manisfest the courage to confront the psychological demons that blocks your way. Otherwise you stay stuck. Good luck with this. It's a powerful moment of discovery.

 

Rande Howell

www.tradersstateofmind.com

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Many say take care of the conscious and known well and let the unconscious and unknown take care of itself. And that works, particularly if one is well adjusted and has had good passage through development and a lack of significant trauma, etc…

 

But there is vastly more to us than what we consciously experience (and identify with). Various names, compatible with whatever model of self is at hand, for them are parts, sub personalities, schemas, archetypical patterns, entities and other (misleading) labels. They also extend into and include ‘nerve’ and ‘heart’ and ‘guts’ and ‘muscle memories’. yada yada psycho bubble

 

Point is – for this topic – if a quorum of these _________(user labeled naming) ‘associates’

rights and wrongs,

wins and losses,

victories and defeats, *

lucks and no lucks

with DEATH itself then you ‘naturally’ will have trouble pulling the trigger.

 

imho, to put this behind you, one generally has to go well beyond what at first feels like a resolution. In addition to something like Rande’s relatively more structured process for working with these issues, also commit to a more unstructured process of day to day, in the moment nonjudgmental mindfulness of body states, mind contents, loves, character, etc - with emphasis / work on bringing things to awareness more than working on ‘changing’ attitudes, beliefs, states, etc … hth

 

* and yes, in this work you need to make clear distinctions between losses and defeats (and also btwn wins and victories)

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rxs,

 

There are few books/articles addressed this particular topic.

 

I have posted a list of books/articles somewhere, but can't remember the site/URL.

 

Check out Dr. Ned Gandevani's book

"How to Become A Successful Trader" ..

There is a chapter dedicated to the topic.

 

Another good article in SFO magazine (few years ago)

titled "Why Can't I pull Trigger'....

 

Also, here is an excellent article by Price Headley

Conquer The 4 Fears Of Trading

 

Good Luck!

 

Regards,

Suri

Thats what I like about TRADERS LAB.

Somebody comes along with a link to a book, article ,more info ,etc

Even though I think madmarket scientist creates these threads

bobcollett

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If your setups work on paper, the only reason they would not work for real would be if you cannot execute the trades properly. Resolve to execute properly and go for it. On paper the strategy will make nothing for you. You have nothing to lose and a lot to gain. You have already done the hard part, getting a workable strategy. Now all you have to do is apply it.

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I'm sure that there are many people in my position who get tired of reading "trade smaller positions" or "reduce your size" :angry:

 

I trade the ES contract and the smallest that can be traded is 1 contract...if it were possible to reduce size (currently US$50/point) I would.

 

Spread betting or trading a different instrument is NOT a solution to the problem.

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Hi, Natedredd10: You said, "Faith is super important..." I agree with you. Lack of faith in their system seems to be a big issue for many traders, and results in hesitating to get in, then once in a trade, getting out too soon. For those whose systems have a high win/loss ratio, developing faith can be relatively easy. For those with potentially profitable systems, but with win/loss ratios closer to 50-50, faith may be a hard won commodity.

 

Many traders have a personal rule that after losing so many pips on a given day (or percentage) or having so many losers in a row, they stop trading. Obviously, from a statistical point of view, this is a formula for ruining your win/loss ratio. Most traders stop because they are so emotional frayed at that point that they feel they can't, or shouldn't, continue trading.

 

My mentor taught me that if you have a losing trade, you must always take the next trade that meets your criteria. The market moves in cycles of trends and consolidation. If you stop trading, you miss the next payout cycle. But psychologically, if you don't take the next trade, you miss learning at a gut level that if you stick with it, your system does work.... and you can have faith in it. And at another level, you miss developing the psychological muscle to do the heavy lifting. In other words, you never develop an effective strategy to manage the strong emotions of trading.

 

Taking the next trade, and the next trade, and the next trade can be tough until you develop faith in your system. One of the best ways to do this is to reduce the overall size of your trades so that a series of losing trades doesn't trigger the same level of emotion distress. This makes it is easier to see it through to the payout cycle and, thus, easier to develop full confidence in your trading system. Once you have solid faith in your system, then increase your trade size gradually, a step at a time, until you are back up to your normal size. If you find that you start to do any of the things that indicate that you aren't trusting your system (hesitating to get in, getting out too soon, etc.), decrease the size of trades again for a while.

 

P.S. In all the above, I'm assuming that you do have a system that works: that you have backtested and know what the win/loss ratio is, and that you have clear criteria for entry, stop placement, and taking profit.

FX Girl,

 

I think "faith" is something traders need to get away from as that typically connotes "uncritical credulity" (aka "hope"). A better term is "trust." It differs from faith in that it is based on observations and probabilities. We don't have faith that the sun will rise in the east, we trust that it will because we have X number of observations upon which to make such a call. If you have sufficiently back-tested and/or forward-tested a strategy, it should open the door for trust to follow. Even then, many can't get over the emotional desire to want certainty.

 

With respect to your previously stated interest about gender comparisons, I'd highly recommend the following podcast:

 

Skeptically Speaking » #81 Delusions of Gender

 

Jack

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Hi, Jack: Thanks for your observations about the difference between faith and trust. I chose the word ‘faith’ because I thought it better reflected the emotionally laden nature of trading and might provoke a deeper level of consideration of the role managing emotions plays in trading success. However, if you would prefer to use the word trust, that is fine with me. I think we are talking about the same concept.

 

I was interested in your observation, “…many can’t get over the emotional desire to want certainty”. Trying to predict market movement is always difficult. Despite all our well-researched, and well-tested system, we never truly know what the market is going to do next. Traders have varying levels of comfort with this ambiguity. For some, ambiguity is enormously distressing, for others, it is mildly uncomfortable, for a very few, it’s exciting. Where we lie on this continuum impacts what kinds of emotional management strategies we must develop in order to trade our chosen system successfully.

 

Thanks for the link to Delusions of Gender – I’m listening to it now.

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It is more than just uncertainty. I have invested many years (5+) into this ‘game’, sacrificing so much of my time into studying and learning to becoming proficient. Hours spent in front of the screens day after day when I could have been doing something else. A loss can often make you feel as if it has all been for nothing. I find that more distressing than anything else.

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An interesting thread, to say the least. However, I'd like to ask if anyone has ever heard of, or experienced, a fear of success? I seem to have this problem. I trade pennies and pink sheet stocks but it seems I am averse to making the substantial profits that trading these stocks can return, sometimes in minutes. I have very good technical abilities but I have a problem in transferring this ability to stock picking. BTW, I don't have a fear of losing as that's what I've been doing for most of the past two years.

 

TIA for all replies.

 

trader.jeff

 

Sounds like you have a particular skill(pennies and pink sheets) and that skill is different to to that required for stock picking. Much like you would not expect a dentist to necessarily be good at doing your legal work for you. Maybe its not mental in this case.:2c:

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Many say take care of the conscious and known well and let the unconscious and unknown take care of itself. And that works, particularly if one is well adjusted and has had good passage through development and a lack of significant trauma, etc…

 

But there is vastly more to us than what we consciously experience (and identify with). Various names, compatible with whatever model of self is at hand, for them are parts, sub personalities, schemas, archetypical patterns, entities and other (misleading) labels. They also extend into and include ‘nerve’ and ‘heart’ and ‘guts’ and ‘muscle memories’. yada yada psycho bubble

 

Point is – for this topic – if a quorum of these _________(user labeled naming) ‘associates’

rights and wrongs,

wins and losses,

victories and defeats, *

lucks and no lucks

with DEATH itself then you ‘naturally’ will have trouble pulling the trigger.

 

imho, to put this behind you, one generally has to go well beyond what at first feels like a resolution. In addition to something like Rande’s relatively more structured process for working with these issues, also commit to a more unstructured process of day to day, in the moment nonjudgmental mindfulness of body states, mind contents, loves, character, etc - with emphasis / work on bringing things to awareness more than working on ‘changing’ attitudes, beliefs, states, etc … hth

 

* and yes, in this work you need to make clear distinctions between losses and defeats (and also btwn wins and victories)

 

Well, if I am going to be quoted as "Rande's relatively more structured process for working with these issues.....", I feel that I need to weigh in.

 

At my recent workshop at the Trader's Expo in Las Vegas, I was stunned to find out that the most powerful fear appears (not while attempting to pull the trigger, which most folks report in my webinars) but while traders are in the trade. By a 5:1 margin in my Worry Management Workshop. It is at moments of uncertainty like "in the trade" that many traders are overwhelmed by their lack of emotional regulation skills and the dark side of our trading emerges and uncertainty becomes adrenaline soaked fear.

There is no escaping uncertainty in trading (or in life). We build carefully crafted comfort zones to exclude working with uncertainty and probabilty BEDAUSE THE BRAIN CAN'T TELL THE DIFFERENCE BETWEEN FEAR AND UNCERTAINTY. And it seeks to create certainty - no matter what. The first step to building a mind that trades well in the uncertainty of life is to learn to manage fear biologically. Once you can do this, getting at the mind and working with it becomes much more possible. In my Stage ONE work, I have adapted Herbert Benson' and Steven Stosney's work on emotional regulation to the trading world. It's not magic. It is re-training the brain to distinguish between worth, uncertainty, and fear. Getting the biologic part of emotional regulation down is essential if you did not happen to be born in the right circumstance for your brain to wire itself for management of uncertainty. And certainly most of us were not born with the gift of a trader's mind. It has to be developed by the vast majority of people entering trading. Fortunately, you can learn how to train the brain (and the mind) to do this. But there is emotional labor involved. No pain, no gain. First get the fear regulated so that it does not overwhelm the circuitry that creates the mind. The mind can be trained much easier if you do this. I lay out this process in my book "Mindful Training: Mastering Your Emotions and the Inner Game". You can read, free, an excerpt on my website.

Good luck

Rande Howell

www.tradersstateofmind.com

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We build carefully crafted comfort zones to exclude working with uncertainty and probabilty BECAUSE THE BRAIN CAN'T TELL THE DIFFERENCE BETWEEN FEAR AND UNCERTAINTY.

www.tradersstateofmind.com

 

isn't this why you should have a trading plan. Then you should not have fear of uncertainty, you know what to do depending on different scenarios....Unless of course you dont really have faith in the plan.

Get used to uncertainty. (somewhere else someone showed me this as an interesting read - http://www.eminipalyer.com/2009/06/learning-to-be-successful-trader.html

 

In reality I have no idea of anything thats going to happen each day....but if its cloudy and forecast to rain, I plan to take my umbrella. If it does not rain I dont kick myself for having it with me.

When it comes to fear in everyday life, again plan not to walk down dark alleys, cross the road in front of busses, if the banks all go under grab the ammo and head for the hills and accept that most days will be much the same as the last.

(Otherwise all good reading.)

Edited by SIUYA

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An interesting thread, to say the least. However, I'd like to ask if anyone has ever heard of, or experienced, a fear of success? I seem to have this problem. I trade pennies and pink sheet stocks but it seems I am averse to making the substantial profits that trading these stocks can return, sometimes in minutes. I have very good technical abilities but I have a problem in transferring this ability to stock picking. BTW, I don't have a fear of losing as that's what I've been doing for most of the past two years.

 

TIA for all replies.

 

trader.jeff

 

Dear Trader.jeff

 

Ask yourself this question. Does the fear of success show up in other domains of your life other than trading? Because we trade our beliefs, trading opens a door to observe ourselves on a deeper level. The interesting thing about trading is that the very psychological demons that we have avoided acknowledging before trading begin to hunt us down when we begin trading. If this phenomenon does not exist out side of your trading, then it probably is not about your psychology of trading. If it does exist in other domains beyond trading and is exacerbated in your trading, then welcome to a rarified moment that you can be mindful of the power of the brain to create self liimiting beliefs called the comfort zone. Fear of success is a common self limiting belief that keeps people stuck in the prison of their comfort zone.

 

Good luck,

Rande Howell

www.tradersstateofmind.com

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To bring a mindset rooted in fear of losing to a proven methodology into the uncertainty of trading is a waste of a perfectly good trading plan and system. After you have tweaked all the elements of your methodology and the problem persists, then look at your self limiting beliefs that actually drive your perception of possibility. These self limiting beliefs will show up as your thoughts urging hestiation or impulse. It is this voice you are looking for. Confronting the self limiting beliefs that limit the possibility that trading could be for you is the next step after that. Of course, to so that you will need to learn how to emotionally regulate the fear that drives your perception. Trading leaves you little choice to confront your inner demons. They are right there with you as your trade. They are hard to miss once you know what to look for. The good news is that they can be conquered as many successful traders can attest. Good luck and have courage.

 

Rande Howell

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