The bests strategy is to start small and build up again. Here is an analogy:
When I was younger I used to ride longboards down steep hills at 40+ mph. It was fun, exhilarating, thrilling! Until I crashed and burned. I was so scared to ride again after I recovered but I was determined to do it again.
I started riding down small hills until I could do it comfortably. Little by little I increased the size of the hill. A few months later I as at 40 mph again.
I ran into a video series on youtube of a seminar put on by Ari Kiev which discusses the fears of traders and the ways to overcome these fears. If you're not familiar, Ari Kiev was interviewed in one of the Market Wizards book and was the psychologist of the traders who worked for Steve Cohen. I don't think I have enough posts here yet to post a link but if anyone is interested, search: Trading - Becoming a Disciplined Trader (Ari Kiev) once at youtube.
This book is a great read, I've discussed reading it before, and using it as a course, and study it and read it again and again. I had watched Mark's DVD course called How to think like a professional trader, It was VERY GOOD, and after studying and applying his methods I've noticed a huge difference, granted it takes effort to change a believe..
Its like getting bit by a dog when you are a child, do you think that every dog you seen later in life wouldn't scare you the same way you did when you were a little child?? its the same way with the markets, FEAR gets ahold of individuals, and they stop following their plan, and then get all confused, etc. So changing your beliefe's are very important, and Mark discusses this in his books, and courses.
I'd highly suggest for every trader to carefully study his book, and do the lessons found in the book, and you will notice a huge difference in your trading..
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There are quite a few books on trading out there basically saying the same thing; trading is 75-90% phsychology, and you need to find a system that fits YOU...!
In this day and age why should you settle with a mediocre system just because it happens to fit your phsyche? I personally wouldn't settle for anything but the best, assuming the system has been tried and tested (weathered a few storms so to speak). If the problem is attached to your trigger finger, then the obvious answer to the problem would be to automate the trading process using software, or have some one else trade your system...
I do realise that the size of the trading account obviously will come into play before one can assess the risk of any trade...
I'd have to say that in my opinion, for what-ever its worth....
You could have a system that has a track record of 80-90 % and yet if you gave this system, method to someone, and trained them, exactly how to make money, they would still mess up, and end up losing...
Again statistics show us that 90% of traders lose money, 90%.....that is a high figure... What is said about the mental aspect of trading is correct, failure to pull the trigger, staying in a losing trade too long, not taking profits, when you should, trading too large, etc. etc. these are all trading mistakes, and unless you address each of these problems then you as a trader, are only going to have limited results. Granted you might have a winning streak here and there, but when you dont deal with these problems head on, you are setting your-self up for a disaster.... There was a trader once who had a 95% losing streak, meaning 95% of his trades were losers, but the 5% of the trades he took, where winners, and made up for the other losers, and he was profitable... WHY? He stuck with his method, he had the mental skills developed, and he had no mental issues surrounding what he was was doing...
So the trading method does have something to do with trading, but having the mental skills, and awareness, are what is really needs to be focused on, and until someone realizes this & can come to grips with the fact that the answer isn't looking for another system/method, not studying charts for years, upon years.....
But the answer is dealing with your fears that you have of the market.... Once this is realized, and dealt with head-on, basically taking personal responsibility for your actions, then you can start to learn, and experience what the 10% of traders experience on a consistentant basis....
Again, just my .02 for what-ever its worth discussing this topic...
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Afraid to Trade ?
Mistakes in trading cant be avoided,
But traders could make less mistakes
As time goes by, make less mistakes, gain experience.
Learn from the mistakes, recorded it in a journal.
Once the mistakes are minimum, an edge will appear.
Eventually this edge will place the trader as a winner
Lowering trade size, going to a more forgiving instrument, are all good advice. But when I get into this kind of rut, I decide to focus on the one set up I trust the most with the instrument I know best, and wait, wait and wait for it to come and pull that trigger no matter when it hits. The waiting can't be a symptom of fear, but one of patience, knowing your time will come. I would also advise against trading short when in this rut, basically stay away from days with higher volatility. Shorting is always more schizo than going long, so it adds to the hesitation, when in fact it does not allow for any hesitation (much like surfing a big wave: you have a split second to commit and that's it). Once you are back on your feet emotionally, then go back to flipping the switch long/short intraday. But for now, stick to waiting for a long set up in a nice trending day. It will be calmer and much easier on your nerves.
Last edited by crosscreek; June 11th, 2011 at 09:12 PM.
I've been in this same situation recently. You are profitable in Sim, you have a hardcore system, and you still can't trade because of those losses on your account. you need to seriously reprogram your mind. this is what you do
categorize your trades into probability odds-
4. Completely certain.
trust me if you've made it this far you know when a 3 or 4 comes your way.
open your DOM and hover your mouse pointer over the entry price on # 3 and 4 level trades.
say out-loud "I AM A TRADER NOT A GAMBLER" then pull your mouse outside the DOM and click something nonclickable to simulate you entering a trade. Use a mental limit/stop loss for exit.
record your results in a journal ON PAPER, this is an absolute must. the journal is reconfirmation that you are in fact a trader and not a gambler. otherwise your instinct will forget even when you do succeed. In your journal record the net profit after each trade. Your instinct needs HARD PROOF.
keep your journal and DOM out at all times when watching the market. If you don't have a net profit in your journal after a few level 4 trades you need to rework your system. but, you probably will have a profit in your journal and it most likely will be significant.
I guarantee after about 5-10 'Days' you will enter a trade.
try it, it works.
Last edited by sidney7g; June 24th, 2011 at 11:14 AM.
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On the psychological aspect, whatever script, mantra, or ritual that works for various people, I think they should use it.
A couple of other comments. First, if a trader has trades he rates 3 or 4 in his arsenal, why would he want to trades rated 1 or 2? Just wait for the 3's and 4's to come and trade them. Also, I think a trader might actually be setting himself for more psychological issues, if he thinks he has trades that are 'completely certain', because when those trades fail, they will cause him to question his own judgment, and that just piles on to the psychological stack.
There is no such thing as 'definetely' or 'completely certain' in trading. The market will do what it will do. The strongest support can and does fail sometimes, the weakest resistance can and does hold sometimes. As traders, we just don't know, we don't know for sure what the market will do, no matter how awesome a trade 'looks', no matter how many structural market dynamics high level theories we use to convince ourselves to pull the trigger. The market will do what it will do. All we can do is look to the past and determine by empirical evidence, how this particular type of trade has performed in the past in this type of market environment, and determine our odds of it working for this instance. A setup with a 70% win ratio, will loose 30% of the time, and that is the most important psychological concept we need to internalize. If we use that setup we will fail to that extend on average. But the good news is, every time it fails, statistically, the next instance is that much more likely to win.
The best way to remove the fear from your trading, is to calculate and know the statistics of your method.
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