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Really afraid to trade?
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Really afraid to trade?

  #1 (permalink)
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Really afraid to trade?

OK. So I know there has been a thread about fear and greed . . . what advice would you give to someone who loves to trade but is deathly afraid to trade LIVE because of previous losses. How do you ever regain confidence from losses?

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  #2 (permalink)
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  #3 (permalink)
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Reduce size, start small, do max 2 trades per day, until you rebuild confidence.
Understand that losing trades are part of the game, but LOSSES are not: you MUST always have some rules in place to avoid losses (that is, to preserve your capital, both financial and mental). If you have good rules, a loss will never happen.

Such rules would be as these:

  • stop for the day if you lose more than xxx
  • stop for the week if you lose more than yyy
  • stop for the month if you lose more than zzz

If you're really afraid, you can always live trade spot forex at 10 cents/pip.

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  #4 (permalink)
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Hey nillz123:

To add to Jagui's comments,

1. Do you have a plan? If not, get one.

2. Can you constantly follow the rules of you plan and make money in SIM mode over a 1-3 month period?

3. If not, do not trade live and waste your financial and emotional capital. Continue in SIM strictly following your plan just as if it were real money.

4. Once consistently profitable in SIM, then move to live money and use small share or lot size per Jaqui suggests.

Good luck..

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  #5 (permalink)
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nillz123 View Post
OK. So I know there has been a thread about fear and greed . . . what advice would you give to someone who loves to trade but is deathly afraid to trade LIVE because of previous losses. How do you ever regain confidence from losses?

first and foremost accept the fact that losses (stops) are part of the game. losses/stops are also part of the setup/strategy and not be treated as failure. most folks (incl. me) dont accept the fact until its too late. unless you realize and accept this simple truth dont trade live.

calculate your risk. trade only if you could afford the risk/loss.

reduce leverage/size until you regain enough confidence.

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  #6 (permalink)
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Normally one is scared because he/she is afraid of loosing its account (hence the show will be over)!

So if you're afraid to lose your money, this is exactly what will happen, YOU ARE going to lose them!
If that is the case, you're either trading scary money, or you've managed to lose many, many times!

I suggest two things:

1. Find a way to get rid of trading scary money! and...
2. Turn all your loses to what they really are. A huge treasure, meaning that you, apart from many, many traders, have faced loses and have got your hands dirty.
Stop being afraid of that, and face them as what they really are. Nothing else than experience, that ought to be putting you in the front row. Why?; you know how to lose!

and 3 (this is a bonus)....find yourself a system, that gives you more good entry's than bad entry's.

We all struggle to make tomorrow look like yesterday!
Get rid of your past and let the future unfold from the now.
Past performance is not indicative of future results.
/George
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  #7 (permalink)
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TraderJesse View Post
Hey nillz123:

To add to Jagui's comments,

1. Do you have a plan? If not, get one.

2. Can you constantly follow the rules of you plan and make money in SIM mode over a 1-3 month period?

3. If not, do not trade live and waste your financial and emotional capital. Continue in SIM strictly following your plan just as if it were real money.

4. Once consistently profitable in SIM, then move to live money and use small share or lot size per Jaqui suggests.

Good luck..


I agree wholeheartedly with this post. You are undoubtedly low on emotional capital, since you referred to previous losses. IF you've got a plan and can follow your rules consistently and you're trading small (like one contract), but you're still afraid, consider a very small profit target for a short while. I realize this is going to be very unpopular advice, but I have found it very helpful to ease back into trading with a small target. While it's true that this small target (such as 2 ticks in the ES) is probably violating your rules if you're practicing with a larger target. In addition, your stop will certainly be a lot larger that your profit target if you're only going for a couple of ticks. However, I too, have been extremely fearful in the past, having been battered and bruised, just like you. Getting out quickly with a small profit has really helped me. Is this a long term solution? No. But, you'll be able to dip your toe back into trading waters and rebuild your confidence. Later, you'll be able to hold on a bit longer. For example, when you get 4 ticks in your favor, you can move your stop to +1 tick to at least not have another loser. Again, there are certainly a number of people who will think I am crazy.

Definitely follow the advice of George, Jagui, and TraderJesse. If you've done all those things, try a small target.

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  #8 (permalink)
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tmmaggi View Post
IF you've got a plan and can follow your rules consistently and you're trading small (like one contract), but you're still afraid, consider a very small profit target for a short while. I realize this is going to be very unpopular advice, but I have found it very helpful to ease back into trading with a small target.


I think this is true. I occasionally do the same. For me these are just scalping trades, but I believe they could be useful to rebuild confidence.

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  #9 (permalink)
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I believe that if you are trading 1 contract and are still uncomfortable with it (ie "scared money"), then really it means you don't trust your method, or you are trading with money you cannot afford to lose.

Instead of funding a trading account saying "I am going to make some money by trading this account", you need to look at it as "I am going to pay my tuition and trading dues with this money. At some point in the future, I will fund my own trading account". If you gasp at this, then it means you are likely trading with money you can't afford to lose and you are also thinking that your going to beat the odds and make money before you've put in your 10,000 hours of trading time.

I've seen many traders try to go smaller and smaller to minimize risks. By this I mean they trade a tiny range chart, they have tiny stops, etc. They are doing this because they want to minimize risks, but really it works against them. Instead of making that mistake, you should consider going the other direction. Instead of scalping, start with swing trading stocks for 2-5 days at a time. Just buy 1 share or 100 shares or whatever, if you have to, don't worry about the $$ gain -- focus on the percentage gain.

The point is, keep the risk at 2% or less of your account size, so you feel very comfortable with it. The point is also that swing trading will slow things down for you, giving you an opportunity to absorb information and not feel you are caught up in the market (like a 5 tick stop that gets hit over and over and over again in futures).

Once you are comfortable enough with swinging stocks, you can either sick with stocks and start uping your position sizing, or you can slowly graduate to futures.

Mike

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  #10 (permalink)
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Big Mike View Post
Instead of funding a trading account saying "I am going to make some money by trading this account", you need to look at it as "I am going to pay my tuition and trading dues with this money. At some point in the future, I will fund my own trading account". If you gasp at this, then it means you are likely trading with money you can't afford to lose and you are also thinking that your going to beat the odds and make money before you've put in your 10,000 hours of trading time.

This is excellent advise.




Big Mike View Post
Instead of scalping, start with swing trading stocks for 2-5 days at a time. Just buy 1 share or 100 shares or whatever, if you have to, don't worry about the $$ gain -- focus on the percentage gain.

This is also good advice, but there could be a problem, depending on the trader's personality.
I did this and the problem for me was that I was not able to sit without a trade for several days in a row, a thing that you must be prepared to do, otherwise you'll take random trades. So the learning is slowed. This is a good thing for someone and a bad thing for others.

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