Fear Vs. Uncertainty in Trading

[ahimsa 10]

hello tradewinds,

sorry maybe iìm in late or not to much intelligent for understand what do you mean?but you want to know if you can increase the desire (of outcome?) without adressing the fear.i think that fear is a road that you can avoid,because is biologically impossible,she is an enemy for a trader but not ever .sometime she help us to stop a bad trade,or better prime a defense mechanism,that many time can save us from a loss.You can learn to manage your fear for arrive to have a good psicho-equilibrium ,fondamentally for all the trader.The gain and the outcome that you (and all us )needed will come after.

 

cheers certenotti

[Tradewinds 12]

i think that fear is a road that you can avoid,because is biologically impossible,she is an enemy for a trader but not ever .sometime she help us to stop a bad trade,or better prime a defense mechanism,that many time can save us from a loss.You can learn to manage your fear for arrive to have a good psicho-equilibrium ,fondamentally for all the trader.

cheers certenotti

 

I think what you are saying, is that fear actually has some good, practical uses. If that's what you are saying, I agree with you. But for me, and at at this point in time, fear is an overwhelmingly bad influence on me, that no longer has any validity in my trading. I have a good system that makes money, but some part of my brain just doesn't believe it. One part of my brain believes it, and another part doesn't. But now the "program" has been written, the neurons have been fused, and they do what they were programed to do. They inject me with fear.

[MightyMouse 12]

What you are stating is true, . . . but if there is a way, I'd like to step out of the cycle of fear and greed. Both motivations seem flawed, and ultimately destructive. Again, what you are saying is true, and greed does work. But how long does greed work, and what is the final outcome on me as a person. I'd like to try to avoid that road.

 

If you take greed to be reckless pursuit of riches, then, sure, it can be destructive. I am referring to greed simply in the sense of wanting more than you need and attempting to achieve it with patience and discipline. In which case it is not destructive. Society and religion have given greed a bad name.

[MightyMouse 12]

I think what you are saying, is that fear actually has some good, practical uses. If that's what you are saying, I agree with you. But for me, and at at this point in time, fear is an overwhelmingly bad influence on me, that no longer has any validity in my trading. I have a good system that makes money, but some part of my brain just doesn't believe it. One part of my brain believes it, and another part doesn't. But now the "program" has been written, the neurons have been fused, and they do what they were programed to do. They inject me with fear.

 

Tradewinds,

 

I do not know if everyone struggles with fear, but i know i did. Time dampened the effect that fear had on me. It is honestly a vague memory at this point. I watched trade after trade go on to do what it was supposed to do without me because I either didn't get in, got out too early, or some combination therein. Eventually I simply got sick of it and it really didn't take long after you get sick of it.

 

How many times can you enter a room and I scream "BOOO" and startle you before you adapt to it and expect it?

 

 

MM

[Tradewinds 12]

Tradewinds,

 

I do not know if everyone struggles with fear, but i know i did. Time dampened the effect that fear had on me. It is honestly a vague memory at this point. I watched trade after trade go on to do what it was supposed to do without me because I either didn't get in, got out too early, or some combination therein. Eventually I simply got sick of it and it really didn't take long after you get sick of it.

 

How many times can you enter a room and I scream "BOOO" and startle you before you adapt to it and expect it?

 

 

MM

 

Well, it's encouraging to hear that you got past the fear. I'm working on that now, from a combination of gaining confidence in my ability to read the market, admitting my fears, and looking at different techniques to deal with the problem.

 

I think part of the solution is simply spending some time thinking about the positive outcome, and letting it "sink in".

[ahimsa 10]

tradewinds .you are in good point of your trading manage,because you are aware and not unaware of

how trading can move our state of soul.i think (but maybe i can wrong),that if you give so much weight to fear to consider more bigger than you,or that your work trading manage that you made on you..maybe for you it's better to let out,a bad and negative energy and work only for increase the positive.You needed to don't trasform fear in an existentialist problem.Sorry for the question,but you trade in forex,stock,index share?,have you notice if this problem is accentuaded when you made scalping,intraday or it's the same if you trade in a long term?

good week end and have a gain days.

 

cheers certenotti

[Tradewinds 12]

Sorry for the question,but you trade in forex,stock,index share?,have you notice if this problem is accentuaded when you made scalping,intraday or it's the same if you trade in a long term?

cheers certenotti

 

My trading style is day trading, very short trades. My average trade would last 5 to 7 minutes. I take profit on every price wave. If the price goes against my trade on the very first move, I would look to exit immediately. I do not use stops. My opinion is, that for very short term trading, stops are a serious detriment. I can see if an order is not going my way, and exit with a very small loss.

 

I don't see any logical reason for ever changing my style or strategy. If I had huge amounts of money to play with, and had a back-tested strategy, where I could just enter orders, set my stops, and then go live my life, then maybe I'd take longer trades.

 

I'm trading the e-mini future, ES. The reason I trade that is because it moves with the market. And I find it easier to track the market as a whole, rather than trying to find stocks that are moving and keep track of individual news events for that stock. The ES reacts to news in general, and it's easier to watch a few scheduled news events than trying to read streaming news headlines every second.

 

In my opinion, trading stocks is absolutely pointless, unless you are a long term value investor.

 

My trading style, of very short term trades, that I am watching every second, decreases the chances of large losses. But sitting there watching the trade, can increase my anxiety.

[ahimsa 10]

oh..in this case the increased of your anxiety is absolutely normal.you are a scalper,performed 5 minute,(me too but i look at 1h and 1d with a serious eyes),but if you could trade the future and not the mini i swear that your hearth-beat could increase up.D'ont worry,(if you 'll performed at long.term your fear,don't could exist)but attention at the stop loss.once a time me too talk about stop.loss like an enemy,(not ever the mental-stop loss is a valid system,because you can have the trap of the hypnotic state,and after you can look truly run the loss).but when i put it in large way is like to have a mental stop..the only save for lose fewer.this is my way.

Edited March 4, 2011 by ahimsa
grammar mistake

[Tradewinds 12]

. . . because you can have the trap of the hypnotic state,and after you can look truly run the loss)

 

You bring up a very interesting and important trader problem that I am starting to consciously deal with, and that is the "hypnotic state". I had never heard of it described that way, but it is the perfect description. I often stop thinking, and stop analyzing the market at some point. I will start watching my profit and loss exclusively, and go "brain dead". :crap: Then I will stop watching my indicators. Then even when I realize what I'm doing, and become mindful that I need to start paying attention to my indicators, I still struggle to interpret and analyze them correctly. I want to get into the habit of cycling through all my indicators, and all the patterns that I have learned, in a calm, and controlled state of mind.

 

I like the term that you used, "hypnotic state". I let myself get "hypnotized", by the price action on the trading ladder, and stop looking at my indicators.

 

If I can become "mindful" of that state of mind that I slip into, then I can recognize it when it happens, and tell myself, "Hey, you are in the hypnotic state, snap out of it."

[davidjohnhall 10]

When it comes to topics like this I like to look at what there is to be afraid of in very simple, black and white terms. With trading I can only think of two things:

 

1. Being wrong

2. Losing money

 

There isn't much else is there?

 

How much fear you experience based on either of those things could be directly related to:

 

1. How much you need to be right.

2. How much you need the money you might lose.

 

To end your fear about these two items:

 

1. Understand that you will be wrong...a lot...and embrace it...in fact, start sharing your losers instead of your winners.

 

2. Don't trade any account killers...if you really believe #1 that should help with number 2. Or if you need that money for dinner tonight, don't trade it.

 

If you know yourself and know your mind/body connection...and trust it...then, when you are scared you will know that...

 

1. There is a legitimate reason for it...

 

If you don't trust it, then you know that maybe...

 

2. You're making the whole thing up.

 

If I am standing in a room and that room is on fire...I am going to be scared and there is going to be a reason for it.

 

If I am standing in a room and there is no fire...and I am afraid that there is going to be a fire...then either I have ESP...or something is out of tune....

 

Have you ever heard of the law of reversed effort?

 

Next month, instead of trying to find winners, try and find losers. Take losing trade after losing trade after losing trade. You might start winning and then you will be mad at yourself because you can't find losers. LOL That's life, right?

 

Sometimes you have to blow up a few accounts to stop being afraid of hitting a losing trade. Sometimes you have to brag at the top of your lungs on a trading forum about how great you are and have everyone watch your trades tank to get over having an ego.

 

But it all comes from experience.

 

When you go to your day job (assuming you don't trade for a living) -- do you feel fear? Or do you have the process automated now?

 

When I first started surfing I peed my pants on any wave above 1 foot. Now I surf huge waves and I'm only thinking about what I want to do on that wave and how I want to do it and I'm having a blast.

 

When i first started trading, any increase in volatility, or any move against my position was enough to freak me out. After trading through 2008 and learning about position size, it would take quite a but to scare me.

 

Time...and experience. Fear is part of what Seth Godin calls "The Dip". The dip is the great filter in an endeavor. It weeds out those without commitment...or those not suited. But if you tough it out and make it to the other side of the dip, then the growth...and the rewards (not all monetary) are yours!

[MightyMouse 12]

When it comes to topics like this I like to look at what there is to be afraid of in very simple, black and white terms. With trading I can only think of two things:

 

1. Being wrong

2. Losing money

 

There isn't much else is there?

 

How much fear you experience based on either of those things could be directly related to:

 

1. How much you need to be right.

2. How much you need the money you might lose.

 

To end your fear about these two items:

 

1. Understand that you will be wrong...a lot...and embrace it...in fact, start sharing your losers instead of your winners.

 

2. Don't trade any account killers...if you really believe #1 that should help with number 2. Or if you need that money for dinner tonight, don't trade it.

 

If you know yourself and know your mind/body connection...and trust it...then, when you are scared you will know that...

 

1. There is a legitimate reason for it...

 

If you don't trust it, then you know that maybe...

 

2. You're making the whole thing up.

 

If I am standing in a room and that room is on fire...I am going to be scared and there is going to be a reason for it.

 

If I am standing in a room and there is no fire...and I am afraid that there is going to be a fire...then either I have ESP...or something is out of tune....

 

Have you ever heard of the law of reversed effort?

 

Next month, instead of trying to find winners, try and find losers. Take losing trade after losing trade after losing trade. You might start winning and then you will be mad at yourself because you can't find losers. LOL That's life, right?

 

Sometimes you have to blow up a few accounts to stop being afraid of hitting a losing trade. Sometimes you have to brag at the top of your lungs on a trading forum about how great you are and have everyone watch your trades tank to get over having an ego.

 

But it all comes from experience.

 

When you go to your day job (assuming you don't trade for a living) -- do you feel fear? Or do you have the process automated now?

 

When I first started surfing I peed my pants on any wave above 1 foot. Now I surf huge waves and I'm only thinking about what I want to do on that wave and how I want to do it and I'm having a blast.

 

When i first started trading, any increase in volatility, or any move against my position was enough to freak me out. After trading through 2008 and learning about position size, it would take quite a but to scare me.

 

Time...and experience. Fear is part of what Seth Godin calls "The Dip". The dip is the great filter in an endeavor. It weeds out those without commitment...or those not suited. But if you tough it out and make it to the other side of the dip, then the growth...and the rewards (not all monetary) are yours!

 

David,

 

The list of fears are a lot longer and more complicated than that. Hopefully, for your sake, they are that simple.

 

 

MM

[Rande Howell 10]

David,

 

The list of fears are a lot longer and more complicated than that. Hopefully, for your sake, they are that simple.

 

 

MM

 

The mother of all fears is the fear of death. Though we have a really souped up hot rod brain compared with other mammals, fear is still governed by the limbic system, or emotional brain. It is around 50 million years old while our new brain is barely beyond being a new born baby. What this means is that the amydala is going to interpret all threat to disorganization of the biological system as a threat to life. It has no idea that you have a psychology. This part of us was wired and operational long before a psychology of self emerged. And the limbic system doesn't "think", it interacts with its environment on an emotional level. And because the communication network is highly enriched moving from the emotional brain to the new brain (and sparce from the new brain to the emotional brain), the emotional brain's emotional urges overwhelm the new brain's capactity to manage the environment rationally. When you hesitate in pulling the trigger on a "by the books" trade, you are experiencing this phenomenon.

 

Distinguishing uncertainty, worry, and fear (and regulating them) becomes vital to a trader. Uncertainty (to the emotional brain) generates confusion, which is going to trigger the brain to fear. This is primitive programming and must be decoupled. Life is uncertain as is trading. If the trader interacts with the biological bias of fear in that uncertainty, a fear based course of thinking and action are brought forward. Regulation work can decouple this connection and a new way of interacting with uncertainty becomes possible.

 

Worry, as an emotional state, is about negative attribution toward the future. Not life threatening, but a diminished sense of possibility about the future. Traders begin to trade "not to lose" while in a worry state.

 

Fear is your brain's response to what it interprets as a life threatening situation. If you have experienced panic or terror, you know the emotion. Getting at the psychological expression of the biological fear of death is immensely important. Otherwise your finger stays paralyzed as you attempt to pull the trigger. Logically, after the incident, you wonder why you couldn't pull the trigger.

 

Your psychology has been officially hijacked by the limbic system mandate to avoid perceived threat in the environment. The problem is that it was a psychological threat (which you can do something about), but not a biological threat to life, which your limbic system doesn't have the capacity to distinguish on its own. This is where emotional regulation and deconstructing the meaning that has been fused into the emotion becomes part of the evolution of the trader. The voice of your fear running around unabated in your mind has to be brought into observation. This is where change can happen

 

Rande Howell

[davidjohnhall 10]

David,

 

The list of fears are a lot longer and more complicated than that. Hopefully, for your sake, they are that simple.

 

 

MM

 

Really, MM? I have to respectfully disagree. That's the great thing about the market (and our emotional composition). It can be as simple or as complicated as we want (or need) it to be.

 

When I am trading in the market, what can actually happen to me?

 

1. I can lose money.

2. I can be wrong.

 

Can I be eaten by a bear? No. Can I fall off a roof? No. Can I go to prison? No. (Well, not if I'm doing it legally).

 

(For me) all market related fears could only be a derivative of those two fears.

 

Just like I choose to see that the market can only...

 

1. Go up

2. Go down

3. Go sideways

 

I know that Mark Douglas states it can do a 1,000 other things. But when I see my set up, and take a position, it can only...

 

1. Hit my target (or move in my direction if I'm trailing a stop).

2. Hit my stop (this includes gapping below it).

3. Or meander sideways.

 

When you say "hopefully, for your sake they are that simple" -- this statement in and of its self seems to imply fear for me. What would happen if I got that list of two fears wrong? Would I lose money? Would I be wrong? I'm okay with both of those outcomes. Again, Mark Douglas asks that we fully realize the risk of each trade before placing it.

 

I apply the same principle to forum posts. Luckily, I can't lose money with a forum post.

 

David John Hall

[ahimsa 10]

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Member Area . Saturday

Mar 05th.Conquer The 4 Fears Of Trading

 

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Written by Price Headley

Tuesday, 03 March 2009 13:01

Merriam-Webster's dictionary defines fear as "an unpleasant, often strong emotion caused by anticipation or awareness of danger, going on to explain that fear...implies anxiety and usually the loss of courage." This definition of fear is useful in helping define the issues that traders face when coping with fear.

 

The reality is that all traders feel fear at some level, but the key is how we prepare to address our concerns related to taking on risk as a trader. In this article I will review four major fears experienced by traders, and I'll take it a step further by noting how the outcomes of these fears create undesirable trading behaviors. Basically, my aim is to have you walk away with an understanding of these dangers so you can and implement strategies that will address your fears and let you get on with your trading plan.

Mark Douglas, an expert in trading psychology, noted in his book, Trading in the Zone, that most investors believe they know what is going to happen next. This causes traders to put too much weight on the outcome of the current trade, while not assessing their performance as "a probability game" that they are playing over time. This manifests itself in investors getting too high and too low and causes them to react emotionally, with excessive fear or greed after a series of losses or wins. As the importance of an individual trade increases in the trader's mind, the fear level tends to increase as well. A trader becomes more hesitant and cautious, seeking to avoid a mistake. The risk of choking under pressure increases as the trader feels the pressure build.

 

All traders have fear, but winning traders manage their fear while losers are controlled by it. When faced with a potentially dangerous situation, the instinctive tendency is to revert to the "fight or flight" response. We can either prepare to do battle against the perceived threat, or we can flee from this danger. When an investor interprets a state of arousal negatively as fear or stress, performance is likely to be impaired. A trader will tend to ?freeze.? In contrast, when a trader feels the surge of adrenaline but interprets this as excitement or a state of greater alertness before placing a trade, then performance will tend to improve. Many great live performers talk of feeling butterflies just before they go on stage, and how they interpret this as a wake-up call to go out and perform at their highest level. That's clearly a more empowering response than someone who might interpret these butterflies as a reason to run back to his dressing room to get sick! Winners take positive action in spite of fear. Read below for tips to conquer the four major fears in trading:

 

Here are the four major fears in trading, and how you can work to handle them:

 

1. Fear of Loss

 

The fear of losing when making a trade often has several consequences. Fear of loss tends to make a trader hesitant to execute his trading plan. This can often lead to an inability to pull the trigger on new entries as well as on new exits. As a trader, you know that you need to be decisive in taking action when your approach dictates a new entry or exit, so when fear of loss holds you back from taking action, you also lose confidence in your ability to execute your trading plan. This causes a lack of trust in your method or, more importantly, in your own ability to execute future trades.

 

Thus, you can see how fear can set in place a vicious cycle of recurring doubt and, in turn, reinforce a traders' lack of confidence in executing new positions. For example, if you doubt you will actually be able to exit your position when your method tells you to get the heck out, then as a self-preservation mechanism you will also choose not to get into new trades. Thus begins the analysis paralysis, where you are merely looking at new trades but not getting the proper reinforcement to pull the trigger. In fact, the reinforcement is negative and actually pulls you away from making a move.

 

Looking deeper at why a trader cannot pull the trigger, I believe the root stems from a lack of confidence about the trading plan, which then causes the trader to believe that by not trading, he is moving away from potential pain as opposed to moving toward future gain. No one likes losses, but the reality is, of course, that even the best professionals will lose. The key is that they will lose much less, which allows them to remain in the game both financially and psychologically. The longer you can remain in the trading game with a sound method, the more likely you will start to experience a better run of trades that will take you out of any temporary trading slumps.

 

When you're having trouble pulling the trigger, realize that you are worrying too much about results and are not focused on your execution process. Make sure your have a written plan and then practice executing your plan.

 

Start with paper trades if you prefer, or consider trading smaller positions to get the fear of losing out of your system and get yourself focused on execution. When in the heat of battle and realizing you need to get in or out of a trade, consider using market orders, especially on the exit. That way you can't beat yourself up for not pulling the trigger on your trade.

 

Many traders may get too cute with a trade and try to work out of a position at a limit price better than the current market price, hoping they can squeeze more out of a trade. But as famed trader Jesse Livermore advised in the classic book Reminiscences of a Stock Operator by Edwin Lefevre, "give up trying to catch the last eighth." Keep it simple with a market order to exit allows you to bring closure when you need it, which reinforces the confidence-building feelings that come from following your trading plan. In the past when my indicators noted it was time to exit, I have experienced firsthand the pain of not getting filled at my limit, watching the option drop and then placing a new limit back where I should have exited at the market in the first place! Then I have realized I was not going to get filled there either, so I again kept lowering my limit until, in frustration, I placed a market order to exit much lower than I could have closed the position initially. Not only can you feel the pain of loss financially but more importantly, you can chip away at your internal state of confidence and create frustration by not getting filled.

 

You should be more concerned about avoiding big losses and less concerned about taking small losses. If you can't bear to take a small loss, you will never give yourself an opportunity to be around when a big winning idea comes along, as every trade you enter has the risk of first turning against you for a loss. You must execute by knowing what your risk is in each trade, and define parameters to make sure you can ride favorable trends correctly as well so that your winners will be larger than you losers. And never get stuck in the mindset of hoping a loser will come back to "breakeven," as that is one of the trader's most deadly mental fantasies. Billions of dollars have been lost by technology investors hoping their stocks would bounce back in recent years to allow them to escape the downtrend. That only led to even greater losses in most cases. That's how a short-term trader can become a long-term investor unintentionally, and that is a position in which you never want to put yourself.

 

Ask how well you trust yourself to execute your trading plan. You want to judge your effectiveness based on how well you get in and out of the market when your method gives entry and exit signals. You'll need to be decisive, not hesitant, know in your heart that your method is well tested and that your risk is low compared to your likely reward. In other words, you must be fully prepared before you go into the heat of battle during a trading day. You need to know where you will enter and where you will exit if you are a discretionary trader. Or you need to know what system you are following and be prepared to enter and exit as the system dictates. This keeps you disciplined and focused on following a process that can generate favorable results over time.

 

 

2. Fear of Missing Out

 

Every trend always has its doubters, but I often notice that many skeptics of a trend will slowly become converts due to the fear of missing out on profits or the pain of losses in betting against that trend. The fear of missing out can also be characterized as greed of a sorts, for an investor is not acting based on some desire to own the security - other than the fact that it is going up without him on board. This fear is often fueled during runaway booms like the technology bubble of the late-1990s, as investors heard their friends talking about newfound riches. The fear of missing out came into play for those who wanted to experience the same type of euphoria.

 

When you think about it, this is a very dangerous situation, as at this stage investors tend essentially to say, "Get me in at any price - I must participate in this hot trend!? The effect of the fear of missing out is a blindness to any potential downside risk, as it seems clear to the investor that there can only be gains ahead from such a "promising" and "obviously beneficial" trend. But there's nothing obvious about it.

 

We remember the stories of the Internet and how it would revolutionize the way business was done. While the Internet has indeed had a significant impact on our lives, the hype and frenzy for these stocks ramped up supply of every possible technology stock that could be brought public and created a situation where the incredibly high expectations could not possibly be met in reality. It is expectation gaps like this that often create serious risks for those who have piled into a trend late, once it has been widely broadcast in the media to all investors.

 

3. Fear of Letting a Profit Turn into a Loss

 

I get many more questions from subscribers asking if it is time to take a profit than I do subscribers asking when they should take their loss. This represents the fact that most traders do the opposite of the "let profits run, cut losses short" motto: they instead like to take quick profits while letting losers get out of control. Why would a trader do this? Too many traders tend to equate their net worth with their self-worth. They want to lock in a quick profit to guarantee that they feel like a winner.

 

How should you take profits? Should you utilize a fixed target profit objective, or should you only trail your stop on a winning trade until the trend breaks?

 

Those who can accept more risk should consider trailing a stop on their trending position, while more conservative traders may be more comfortable taking profits at their target objective. There is another alternative as well, which is to merge the two concepts by taking some profits off the table while seeking to ride the trend with a trailing stop on the remaining portion of the position.

 

When I trade options, I usually recommend taking half of the position off at a double or more, and then following the half position still open with a trailing stop. This allows you to have the opportunity to ride my best trading ideas further, as these are the trades where I am mostly likely to continue being right. Yet, I am also able to get the initial capital at risk back in my pocket, which frees me from worrying about letting a profit turn into a loss; I am guaranteed a breakeven even if the other half position were to go to nothing overnight. My general rule for the remaining half position is to exit if it reaches my trailing stop of half its maximum profit on an end-of-day closing basis, or scale out of the remaining half position every time it doubles again.

 

I'm also a big fan of moving your stop up to breakeven relatively quickly once the position starts to move in your favor, by about five percent on a stock or by roughly 25 percent on the option. It is also critical to recognize the impact of time spent waiting for a position to move. If you are not losing but not yet winning after several trading days, there are likely better opportunities elsewhere. This is known as a "time stop," and it will get your capital out of non-performers and free it up for fresher trading ideas.

 

4. Fear of Not Being Right

 

Too many traders care too much about being proven right in their analysis on each trade, as opposed to looking at trading as a probability game in which they will be both right and wrong on individual trades. In other words, their overall method will create positive results.

 

The desire to focus on being right instead of making money is a function of the individual's ego, and to be successful you must trade without ego at all costs. Ego leads to equating the trader's net worth with his self-worth, which results in the desire to take winners too quickly and sit on losers in often-misguided hopes of exiting at a breakeven.

 

Trading results are often a mirror for where you are in your life. If you feel any sort of conflict internally with making money or feel the need to be perfect in everything you do, you will experience cognitive dissonance as you trade. This means that your brain will be insisting that you cannot exit a trade at a loss because it ruins your self-image of perfection. Or if you grew up and feel guilty about having money, your mind and ego will find a way to give up gains and take losses in the markets. The ego's need to protect its version of the self must be let go in order to rid ourselves of the potential for self-sabotage.

 

If you have a perfectionist mentality when trading, you are really setting yourself up for failure, because it is a given that you will experience losses along the way in trading. Again, you have to think of trading as a probability game. You can't be a perfectionist and expect to be a great trader. If you cannot take a loss when it is small because of the need to be perfect, then the loss will often times grow to a much larger loss, causing further pain for the perfectionist. The objective should be excellence in trading, not perfection.

 

In addition, you should strive for excellence over a sustained period, as opposed to judging that each trade must be excellent. The great traders make mistakes too, but they are able to keep the impact of those mistakes small, while really riding their best ideas fully.

 

For the trader who is dealing with excessive ego challenges (yet, who wants to admit it?), this is one of the strongest arguments for mechanical systems, as you grade yourself not on whether your trade analysis was right or wrong. Instead you judge yourself based on how effectively you executed your system's entry and exit signals. This is much easier for those traders who want to leave their egos at the door when they start to trade. Additionally, because we are raised in a highly competitive culture, the perception of a contest or competition will also bring out your ego's desire to win and beat others.

 

You will be better off seeing trading as a series of opportunities that will become apparent to you, and your task is to create a plan that finds opportunities with potential rewards that are several times greater than the risks you incur.

 

Be sure you are writing down your reasons for entering each trade, as the ego will play tricks and come up with new reasons to hang on to losing positions once the original reasons have evaporated. One of our survival mechanisms is remembering the good and omitting the bad in our minds, but this is dangerous in trading. You must acknowledge the risk and use a stop on every trade to admit when the analysis is no longer timely. This helps prevent undesirable situations where you get stuck in a position because you did not adhere to your original stop. This is a bad use of capital being tied up in an under-performing position, when there are likely to be many better opportunities elsewhere. Trading without stops is an ego-driven approach that hopes to avoid accountability for a losing trading idea. This is an unacceptable behavior to the successful trader, who knows he must limit risk with stops to stay in the game for the next trading opportunity.

 

In summary, your trading plan must account for the emotions you will be prone to experience, particularly those related to managing fear. As a trade, you must move from a fearful mindset to mental state of confidence. You have to believe in your ability as well as the effectiveness of your plan to take profits that are larger than the manageable losses. This builds the confidence of knowing that you are on the right track. It also makes it easier to continue to execute new trades after a string of losing positions. Psychologically, that's the critical point where many individuals will pull the plug, because they are too reactive to emotions as opposed to the longer-term mechanics of their plan. If you're not sure if you can make this leap, know that you can if you start small.

 

Too many investors have an "all-or-none" mentality. They're either going to get rich quick or blow out trying. You want to take the opposite mentality - one that signals that you are in this for the longer haul. This gives you "permission" to slowly get comfortable and to keep refining your plan as you go. As you focus on execution while managing fear, you realize that giving up is the only way you can truly lose. You will win as you conquer the four major fears, to gain confidence in your trading method and, ultimately, you will gain even more confidence in yourself.

 

 

.Copyright © 2005 - 2011 THE TRADER'S JOURNAL.

 

tradewinds i send you this journal article,(maybe you know).You mentioned the ladder and this talk

about the fear that we meet own in the trading ladder.This is a path that the majority people that trade

covered.I use the term hypnotic state because for me is the only way for describe the stillness that i

have when the mental stop-loss become a trap and don't permitted to close immediately a loss.

You never ask why fear and agree ,are so much mentioned in trading,and established many reflection point?The fear it's a natural state that whomever had,at least some time in life ,and greed? whomever

trade is aware to be a bit greed?,is the negotiation law.If we have so interested to buy and sell,fondamentally we'll must recognize to enter in a agree operating cycle.

Nobody of us ever win or ever lose.there are a statistic tha explain that only the 5% that who trade is a winner trader.But also Livermore was been a big trader....but at the end he made his trade more like a gambling,he commited at the end of his career, a principiant mistake and his went out of mind.Don't permitted at your mind to take the windward of your wise and reasonabless,and if you, in a particular moment of your life are able to see that had a bad moment for your pshicho.phisic equilibrium,stop to trade is the only way for don't collect loss up loss.may the gain be with us.

 

certenotti

[davidjohnhall 10]

The mother of all fears is the fear of death. Though we have a really souped up hot rod brain compared with other mammals, fear is still governed by the limbic system, or emotional brain. It is around 50 million years old while our new brain is barely beyond being a new born baby. What this means is that the amydala is going to interpret all threat to disorganization of the biological system as a threat to life. It has no idea that you have a psychology. This part of us was wired and operational long before a psychology of self emerged. And the limbic system doesn't "think", it interacts with its environment on an emotional level. And because the communication network is highly enriched moving from the emotional brain to the new brain (and sparce from the new brain to the emotional brain), the emotional brain's emotional urges overwhelm the new brain's capactity to manage the environment rationally. When you hesitate in pulling the trigger on a "by the books" trade, you are experiencing this phenomenon.

 

Distinguishing uncertainty, worry, and fear (and regulating them) becomes vital to a trader. Uncertainty (to the emotional brain) generates confusion, which is going to trigger the brain to fear. This is primitive programming and must be decoupled. Life is uncertain as is trading. If the trader interacts with the biological bias of fear in that uncertainty, a fear based course of thinking and action are brought forward. Regulation work can decouple this connection and a new way of interacting with uncertainty becomes possible.

 

Worry, as an emotional state, is about negative attribution toward the future. Not life threatening, but a diminished sense of possibility about the future. Traders begin to trade "not to lose" while in a worry state.

 

Fear is your brain's response to what it interprets as a life threatening situation. If you have experienced panic or terror, you know the emotion. Getting at the psychological expression of the biological fear of death is immensely important. Otherwise your finger stays paralyzed as you attempt to pull the trigger. Logically, after the incident, you wonder why you couldn't pull the trigger.

 

Your psychology has been officially hijacked by the limbic system mandate to avoid perceived threat in the environment. The problem is that it was a psychological threat (which you can do something about), but not a biological threat to life, which your limbic system doesn't have the capacity to distinguish on its own. This is where emotional regulation and deconstructing the meaning that has been fused into the emotion becomes part of the evolution of the trader. The voice of your fear running around unabated in your mind has to be brought into observation. This is where change can happen

 

Rande Howell

 

 

Luckily, I can't actually die in the market.

 

If I lose all of my money and take my own life then my death is based on my reaction to something that can actually happen in the market.

 

It is very true what you said about uncertainty. But I think it's mistake to try and rid ourselves of uncertainty. The better effort (for me) is to accept uncertainty. Once I realize that the distribution of returns for any given system (once again as Douglas states -- wow -- I really like that guy LOL) is random then I know that anything can happen.

 

If most people seek comfort (and I believe that's part of the human condition) and 95% of traders lose money, then (to me) it follows that if I want to be one of the 5% that makes money then (on some level) I will be feeling uncomfortable and will have to transcend that feeling.

 

David John Hall

[davidjohnhall 10]

Hi Certonotti,

 

Thanks for posting that article! Headley is great. Seems he doubled my list and ended with 4. But I think that fear of missing out can be seen as the fear of being wrong. And I think that the fear of letting a profit turn into a loss could be seen as the fear of losing money and the fear of being wrong.

 

So I think I'm still back to 2.

 

David John Hall

[MightyMouse 12]

Hi Certonotti,

 

Thanks for posting that article! Headley is great. Seems he doubled my list and ended with 4. But I think that fear of missing out can be seen as the fear of being wrong. And I think that the fear of letting a profit turn into a loss could be seen as the fear of losing money and the fear of being wrong.

 

So I think I'm still back to 2.

 

David John Hall

 

David,

 

 

I have no fear of losing. I hate losing. I get annoyed when I lose. I certainly do not want to lose and i lose more than i win.

 

I am not afraid to be wrong. I hate being wrong. I do not want to be wrong, and i am wrong more than I am right.

 

I do not think i walk on water. I have no fear of losing because i risk a very tiny amount. A very bad day for me ends up being about a 2% loss in my account. Not a bad trade, but a bad day with multiple, multiple losses. Fortunately, good days are far better than bad days for me. I do know how to milk a position for almost everything that it is worth. Can things change for me? There is no doubt in my mind that they will. I hope that I can adapt when they do. I think 1-2% stops on a trade are crazy if you are day trading. It's almost a guarantee that someone will drain their account or deflate their ego to where they are afraid to trade

 

The quickest way to reduce or remove your fear of loss is to reduce the amount you lose. You do not need years of psychotherapy.

 

If I used 2% stops and took a few losers in a row, i would be afraid to trade too. If you can't reduce your stops to a level that you could care less about, then you probably do not have enough money to trade the instrument you are trying to trade.

 

 

MM

[UrmaBlume 10]

Most fears come from a lack of complete understanding. In trading most retail traders operate methods or systems without a complete knowledge of true expectation.

 

In poker an understanding of pot odds and implied odds removes fear. In a situation where it is 5 to 1 against a player making his hand he will lose 5 of 6 attempts but if the pot contains 10 to 1 money the play carries a positive expectation and he welcomes as many of those situations as he can find even though he will lose over 80% of the times he tries.

 

When the money/pot/implied odds are greater than the drawing odds he KNOWS to go for it and over time he will win.

 

The same is applicable to trading. The issue is that most, especially retail, traders don't know either their TRUE pot/money odds or their TRUE drawing odds. In point of fact most don't even know how to calculate either odds or expectation and that is why so many have "fear" issues.

 

If you know with certainty that your trade will work 70% of the time and that the average loss will be <= the average win then how can there be fear?

 

Information = Equity

 

At the poker table everybody has access to the same raw data - each player can see the community cards, the amount of money in the pot, the size of the stack in front of each player and observe the actions and reactions of every player. The player who best processes this raw data into actionable information is the favorite.

 

In trading it all starts with the data and the data starts with the tick/transaction and most everybody has access to tick data. Long term trading success is not about instinct, divine inspiration or spontaneous intellectual combustion. It is about intelligent data processing and sound method.

 

Information = Equity and Understanding eliminates fear - of course knowing the TRUE odds is part of all that.

 

cheers

 

UrmaBlume

[davidjohnhall 10]

David,

 

 

I have no fear of losing. I hate losing. I get annoyed when I lose. I certainly do not want to lose and i lose more than i win.

 

I am not afraid to be wrong. I hate being wrong. I do not want to be wrong, and i am wrong more than I am right.

 

I do not think i walk on water. I have no fear of losing because i risk a very tiny amount. A very bad day for me ends up being about a 2% loss in my account. Not a bad trade, but a bad day with multiple, multiple losses. Fortunately, good days are far better than bad days for me. I do know how to milk a position for almost everything that it is worth. Can things change for me? There is no doubt in my mind that they will. I hope that I can adapt when they do. I think 1-2% stops on a trade are crazy if you are day trading. It's almost a guarantee that someone will drain their account or deflate their ego to where they are afraid to trade

 

The quickest way to reduce or remove your fear of loss is to reduce the amount you lose. You do not need years of psychotherapy.

 

If I used 2% stops and took a few losers in a row, i would be afraid to trade too. If you can't reduce your stops to a level that you could care less about, then you probably do not have enough money to trade the instrument you are trying to trade.

 

 

MM

 

Excellent points, MM.

 

I also have no fear of being wrong. Or of losing money. Those are simply the only 2 possible things that i can see happening in the market.

 

I also never trade with anything less than a 10% stop and position size accordingly. With the types of stocks I trade that's usually around 2*ATR and my targets for scaling out start at 6*ATR.

 

But things used to be different for me. I used to trade only 1-2 positions, counter trend, all in. LOL FEAR ran rampant then. I was VERY afraid. Looking for a big score. And VERY excited when I won. I remember doubling my account in 2008 on 1 trade. Felt like a genius. But forgot to remind myself how I had halfed my account earlier on in the year. LOL Needless to say people didn't like to be around me much.

 

Then I read Trend Following by Covel, plodded my way through some Ralph Vince, learned about optimal F, read some Mark Douglas and his ideas about Flow, read Van Tharpe, looked at other trend following models and their money management and came to something that works for me.

 

I'm also not afraid of being wrong. What cured this for me was 1) Taking 27 losses in a row once. Talk about Black Swan! Or was it? That could have been the average for the way I was trading at the time. 2) I started posting entry and exit points on another message Board and saw how little the fear of being wrong has to do with money. They are separate. Because I was petrified and I didn't have a single dime on the line. Just told everyone to be transparent for a month and see how that felt. It's natural to want to be right. But once I put my screw ups on display for all to see -- seems like my ego went poof. It was great.

 

But after all that I still can't see any other items that can actually happen in the market. Maybe that is just me and I'm completely willing to admit that. Others may have realized different fears. Maybe they were abducted by stock market aliens while trading. I don't know.

 

Great discussion.

 

David John Hall

[Tradewinds 12]

But once I put my screw ups on display for all to see -- seems like my ego went poof. It was great.

 

This is a very interesting point. I have struggled with admitting how long this road has been, and that I'm still not trading live. It's not that I tell people I am a successful trader, or that I'm trying to convince people I'm a successful trader. I'm not proactively trying to pawn myself off as something I'm not. And it's not that I don't know anything about trading, because I do. But my pride doesn't want to get it's ego bruised. So here it is for all to see. I am NOT a successful trader. I am afraid of trading live. And it's embarrassing after working at this for over 3 years now!! :embarassed: Ok, now I'm free. :rofl: I don't need to worry about that anymore.

 

I wouldn't be surprised if a lot of traders struggle with this. We all want to be successful and financially secure, and feel that we are a success story. I wonder if those 90% who don't make money, just quietly fade away into the shadows, and the story never gets told. Hopefully I'm too stubborn to have that happen. lol

[davidjohnhall 10]

This is a very interesting point. I have struggled with admitting how long this road has been, and that I'm still not trading live. It's not that I tell people I am a successful trader, or that I'm trying to convince people I'm a successful trader. I'm not proactively trying to pawn myself off as something I'm not. And it's not that I don't know anything about trading, because I do. But my pride doesn't want to get it's ego bruised. So here it is for all to see. I am NOT a successful trader. I am afraid of trading live. And it's embarrassing after working at this for over 3 years now!! :embarassed: Ok, now I'm free. :rofl: I don't need to worry about that anymore.

 

I wouldn't be surprised if a lot of traders struggle with this. We all want to be successful and financially secure, and feel that we are a success story. I wonder if those 90% who don't make money, just quietly fade away into the shadows, and the story never gets told. Hopefully I'm too stubborn to have that happen. lol

 

Tradewinds,

 

Thanks for sharing that! It takes a ton of courage and honesty. I always tell myself that Dan Zanger blew up 3 accounts and studied for 10 years before the right market came along and he put his knowledge into practice and turned 10k into 18 million. On top of that I've read countless interviews in the market wizards where the traders say it takes a good 5-10 years to become a trader.

 

This is a process. I wasn't anywhere near proficient for the first 4-5 years and only in the last 2 have some of the lessons come into play.

 

One of the things that helped turn things around for me besides backtesting was keeping a trading journal. I made my own trades my biggest area of study. What worked for me, what didn't work for me. At one point I was so paralyzed that I couldn't pull the trigger for 6 months straight. It was because I secretly KNEW i didn't know what I was doing. I vowed myself that I wouldn't buy another stock until I had a complete method worked out for myself.

 

Ego does play a really big part in all of this. I had several knock down drag out fights on forums with more experienced traders because I didn't want to listen -- but finally asked myself WHY am I fighting? What am I trying to protect?

 

I don't know why we're afraid to look foolish. I don't know why there's so much ego capital to protect, but it's there.

 

On the other message board I created a 1 month test -- trade 3 stocks at a time and post them for all to see. Trade 1 long no matter the general market direction. Trade 1 short no matter the market direction (I am famously BAD at going short) and trade 1 random pick and random direction.

 

Believe it or not, it was the perfect exercise. It was so embarrassing at first. I had like 6 losing shorts in a row before I got the hang of how shorting worked for me. Just knowing it was all out there to see. Even the random trade was embarrassing. But half way through the month I started to relax and we all learned a lot. in the end I had a great return, but half way through I think I said, even if I would have ran each trade into the ground and messed everything up and blew it all it would have still been worth it.

 

So I say hang in there! Year 4.5 is when it started to come together for me. Don't be afraid to be wrong. Put your losing trades out there for all to see. Accept them. Relish them because you learn more from them than you do your winners.

 

Thanks again, Tradewinds.

[Ingot54 13]

What does this discussion open or close for you as a trader?

 

Trading does not come natural to the human brain. For the vast majority of traders, it has to be learned. From an evolutionary perspective, just a few short years ago we were all cavemen. In your ancestor’s world there was no reason to separate uncertainty from fear. The world was a dangerous place and if you experienced uncertainty in your dealings with your environment, there was a good chance you were facing a mortal threat. Uncertainty became glued to fear and anxiety as a survival trait. And that trait got transmitted to future generations -- long after the usefulness of glueing uncertainty and fear together.

 

Your inner caveman still lives within you as you trade. Your limbic brain (caveman’s inheritance to you) still is still watching his environment (your trading screens now) and interpreting from an evolutionary bias that locks uncertainty and fear together – rather than distinguishing them from one another. This deeply embedded trait has also been uploaded into your psychology. This is the psychology of self that trades and experiences worry and fear when you are supposed to be impartially managing risk with your trading plan.

 

Separating uncertainty from worry and fear (more primitive parts of your survival brain) – caveman – is what is required for a trader to evolve from fear based interpretations of uncertainty to risk management interpretations of uncertainty. So if you're having difficulty moving one set of psychological skills that proved okay successful in one domain of your life to success in trading, welcome -- this is typical. There is nothing "wrong" with you. But it does indicate that the "you" that your brain has organized you as needs to be changed. And that new psychological skills will need to be developed to replace your inheritance from caveman. Otherwise caveman will continue to participate in your trading. That's all.

 

The mindset for the vast majority of traders has to be developed. Particularly the management of uncertainty and the meaning that becomes embedded tin he meaning making pathways of your brain (that's your perception). This is where you will find your self limiting beliefs about yourself. If you experience hesitation as you evaluate set ups for risking capital, if you are seized with fear as you try to pull the trigger, or if your heart pounds as you enters a trade (particularly when it goes against you), you are experiencing a biological predisposition that has shaped your personal psychology to avoid uncertainty -- that's your caveman trading along side of you, perhaps even taking over. It is the mindset that you take into uncertainty (that's trading) determines the probability of success.

 

Evolutionary and psychological bias, in the vast majority of traders, will have to be examined and changed for this to occur. It takes emotional labor, and that's the price for re-development of the self designed for trading. It's a great personal development adventure. Traders often invest years in learning to know the self and developing a psyhology that trades effectively. This process is unavoidable.

 

Where are you in the evolution of this process?

 

Rande Howell

 

I have never heard such pathetic explanation of the human condition in all my decades of walking this planet!

 

I am sorry for your approach and for the beliefs you espouse, Rande. I am not sorry for my indignation, or for confronting on this. You want to reduce everything to the level of the animal - you state as facts that we have animal over-riders governing our every activity, and this is typical of the unwashed academic of today - instead of recognising man as a distinct and unique creation amongst other creatures, you drag him down to the animal. I totally reject this thinking.

 

Yes - you will have friends who nod in agreement, or nod ignorantly - but if this is what your years of study/learning has made of you, I don't think you will ever have anything to offer me. Your caveman theories actually do explain quite well some of the fright/fight or flight theories, but conveniently ignore the unique qualities of man - that of spiritual (note that this is NOT a religious situation, but a spiritual one - there is a huge difference) depth in the human being. I speak of the kind of depth that allows a man to be an over-comer of adversity, through resourcefulness and inner strength.

 

Spirituality is what gives man the transcendent ability to rise above circumstance - to be afraid but act correctly regardless, because he has a certainty within. It is my interaction with higher values that give me a reason to trade, to work, to live my life unselfishly and to contribute and to attempt to bring others up with me.

 

What animal ever does this?

 

The fact that I have been able to basically work out my own trading and my own trading success, without reverting back to my "baboon ancestry" immediately provides me with evidence that your words are simply academic crap.

 

This is nothing to do with evolution, or religion, so before people go rushing in to take this off topic, I want to state that.

 

What it is about is that we have a situation where a human being will be confronted by fear of loss. There are tools available to assuage those kinds of losses, but human beings are basically too lazy and too spoiled by affluence to get out of their own way and learn to master those tools.

 

Instead we are happy to sit here behind behind computer screens and read without question or comment, some academics sprouting theories that are baseless nonsense.

 

I have had my share of study and learning, and I am in my 7th decade of life - all of my life has been spent in the scientific field of chemistry, physiology, biology and medicine. I have a lot more to learn yet. But I am not going to sit here and be told by some other academic that it is because of the animal in me that I am having trouble trading because it is not my fault - it is the 50 million yr old gorilla brain in me!

 

Look - if you want to be unafraid - calm, detached, confident in trading - then you will NEVER achieve that without having an edge, and understanding that edge.

 

Do you think that some trader sitting in the middle of Bombay or Delhi is worried about his "reptilian brain" or what his "limbic system" is preparing for him, or how his "Amydala is interpreting" the move against him of 3 ticks?

 

No - he probably is more concerned about learning to master his trading - he knows that a move of three ticks is not a threat to his financial life, or indeed a physical threat. His "fight or flight" response is to get his head deeper into his technical learning, and his understanding of his trading principles.

 

If people want to listen to this academic nonsense to explain why they are unable to overcome a lack of knowledge, or a lack of mastery in a very difficult vocation, then please be my guest. The cross-infection between Zoology, Anthropology and Psychology is unwarranted and unscientific

 

But I implore all of you - to use the head that you have, that is far above the chimpanzee, to understand that there IS another explanation and approach to overcoming ignorance in how to trade. We do not need comparisons with animals or evolution to explain the laziness of an entitled group who expect to participate in financial markets long before they are technically prepared or trained.

 

Instead we get this pseudo-science fed to us - totally unprovable stuff by the way - that somehow it is not our fault - the problem is in our heads.

 

You have a brain - use it. Get over your laziness and failure to take action.

Educate yourself about the markets you are trading.

Stop making excuses for your own failure to move your butt.

 

Many come into trading thinking that the disclaimers don't apply to them - but that's what they are there for - the markets are going to educate you, unless you educate yourself. And many come into the markets thinking that in a few short weeks they will be able to buy-low-sell-high just like th glossy web-site said.

 

So it doesn't work out quite like that. The "few short weeks" get extended to "a few months" but the reality is that the process may take Y-E-A-R-S to understand all that has to be taken into account. The markets thrive on new participants. And obviously there is quite another parasitic market thriving on holding the hands of those who have not done their homework.

 

If people think that the pseudo-science of the animal kingdom is going to make one scrap of difference to the required knowledge of what to do when the market turns against you, then please - continue. I belong to a group of traders who KNOW I am much better than that - I know how to use my brain to find my own solutions, and I am succeeding at that.

 

And guess what - not a psychological idea in sight! Psychology as applied to trading, glosses over what is actually a very corrupt and dangerous financial pursuit. Those who think they can get their heads straightened out so that the fear of loss they are feeling becomes a bit numb, are deluded.

 

What they really need is a sense of appreciation - to get rid of the "easy-come-easy-go" mentality, and to begin to truly value their money; to get seriously hungry for the knowledge and ability to engage the markets on the correct (technical and strategic) terms; to stop playing in the muddy waters of psychology, which is a cop-out ... a crutch ... an excuse for failure to apply the principles of learning and engagement in difficult financial markets.

 

I get quite angry and feel like abusing those who are lying to traders about what is really necessary to move them from their folly. I find it quite extraordinary that a "professional" person can come onto a forum and peddle such nonsense.

 

It doesn't matter if 100,000 people all believe something that is wrong - it is S-T-I-L-L wrong ... the number who believe it does not make it right. Guess what - the problems will not go away until YOU decide you have had enough. The markets do not exist to give YOU money.

 

What is true in trading is not going to be found in dealing with your so-called limbic system. It sounds nice. It sounds plausible. It creates an artificial void begging to be filled, and lo! here is someone who can fill it for you. In fact there is an ENTIRE industry feeding off such theories today - creating-then-solving mythical problems. The industry has reached critical mass - it is even respectable now, and has its guru's and shining lights.

 

Sorry - I think I am a little above this approach.

 

EDIT: I do have to agree with your opening statement, Rande -

 

"Trading does not come natural to the human brain. For the vast majority of traders, it has to be learned."

 

From there you had a golden opportunity to truly get traders onto the correct path of education.

 

Why didn't you?

 

What is your motivation for persisting with this red-herring of evolution and the Baboon mentality supposedly inherent in traders?

Edited March 6, 2011 by Ingot54

[Ingot54 13]

I have struggled with admitting how long this road has been, and that I'm still not trading live. It's not that I tell people I am a successful trader, or that I'm trying to convince people I'm a successful trader. I'm not proactively trying to pawn myself off as something I'm not. And it's not that I don't know anything about trading, because I do.

 

I wouldn't be surprised if a lot of traders struggle with this. We all want to be successful and financially secure, and feel that we are a success story. I wonder if those 90% who don't make money, just quietly fade away into the shadows, and the story never gets told. Hopefully I'm too stubborn to have that happen.

 

Try substituting the word "committed" for the word "stubborn" Tradewinds, and I think you begin

to see the positive side of your approach.

 

The word "passion" does not need to mean "obsession" either.

 

I thought I would throw that one in there, because you need both a passion and a commitment

in order to have the motivation that the outside world perceives as persistence.

 

In my view you have those qualities, as does Davidjohnhall.

 

David's story is actually very encouraging, because it shows that personal honesty pays huge

dividends, and truly it is the best way forwards. David also shows that by revealing the 800lb Gorilla

in the room and dealing with it, you can then move on to dealing with the 600lb Gorilla, and then

the 200lb one ... and so on. Eventually all the monkeys are caged, and you get on peacefully with it.

 

Tradewinds, are you doing ANY live trading yet? I ask that because I too went through a stage of not

trading because I didn't want to blow up again.

 

But I set myself a small goal. I wanted to find a trade that actually embodied to the letter everything in

my system. And all I wanted to do was take that trade and make a few pips to encourage myself that

I was on the right track.

 

The trade WAS successful, and so I decided to continue to look for JUST ONE TRADE that met all my

conditions. I had to remain transparently open with myself at all times, to refrain from drifting back into

the impulsive kinds of trades that had dogged my trading earlier.

 

It worked so well, that now I have no fear of trading as such.

 

Over the past three weeks I have traded 5 times each week. The first week I made 50 pips nett but

the second week was a loss of 80 pips. This week I made 50 pips (round figures all of these).

 

I have no fear or uncertainty left in me regarding my setup and execution. I do have uncertainty about

the outcome, but I do not let it bother me. What I do is look over my trade while in progress and if it

retains the qualities that convinced me to take it, I persist.

 

My loss week came about as a result of trading in a lower TF than normal, using a SL that was unsuitable.

So it is that a little insight overcomes fear. I didn't need to brainwash myself in any way - just recognise

what the true reason for the loss was, and get on with the next trade. Truth (light) will always defeat fear

(darkness) and if you search for the truth in any failure, the result will be the dispelling of fear.

 

Enlightenment leads to insight.

Insight leads to confidence.

 

Confidence leads to taking the trades that your strategy gives you, unconditionally, knowing the outcome

will provide either a) profits or b) opportunity for enlightenment

 

Suddenly you will find yourself on a positive journey, as both wins and losses point the way to further wins.

 

Failure to be open and honest with losses, as David so graciously shared, can only lead to more secrecy

and fear, instead of insight and profit.

 

Maybe you should try some live trading again?

[Tradewinds 12]

Try substituting the word "committed" for the word "stubborn" Tradewinds, and I think you begin

to see the positive side of your approach.

 

The word "passion" does not need to mean "obsession" either.

 

I thought I would throw that one in there, because you need both a passion and a commitment

in order to have the motivation that the outside world perceives as persistence.

 

Those are better words. Actually, I've just started thinking about my commitment to trading, and realized, that I really haven't made a conscious decision to make the commitment. It's fascinating how so many things lurk beneath the surface, . . . they are there, but until I consciously name them, and face it, the real action doesn't happen.

 

I've always wanted to trade. I know I can do it. I spend all my spare time learning about trading. So I have committed time, effort and resources; but even with all of that, I don't think I've ever really asked myself if I'm really committed to it. I can say that I am, and being able to state that gives me a sense of power.

[Tradewinds 12]

But I set myself a small goal. I wanted to find a trade that actually embodied to the letter everything in

my system. And all I wanted to do was take that trade and make a few pips to encourage myself that

I was on the right track.

 

The trade WAS successful, and so I decided to continue to look for JUST ONE TRADE that met all my

conditions. I had to remain transparently open with myself at all times, to refrain from drifting back into

the impulsive kinds of trades that had dogged my trading earlier.

 

It worked so well, that now I have no fear of trading as such.

 

I have a particular set up in mind that I would never pass up, unless a scheduled news event was coming out in 5 minutes. I need to at least take that trade, because the odds are very much in my favor. So, that sounds like an excellent way to start. I'm making the commitment right now to take a trade live next week. lol.