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Overcoming the Fear of Losing


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Overcoming the Fear of Losing

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  #1 (permalink)
Shlekht
Anchorage Alaska
 
 
Posts: 2 since May 2022
Thanks: 9 given, 1 received

Hey all,

I don't know how common this is but my problem so far seems to be fear of entering a trade. I'm relatively new to trading and trade NQ and ES using Market Profile. I've been researching and watching the charts using market profile/orderflow for the better part of a year now and it feels like I'm finally getting a good grasp on how the market moves and what clues I can decipher from MGI. However when I see a setup developing I really struggle with entering the trade. This fear of losing just paralyzes me and I find myself in a loop of "what if's" that prevent me from taking setups that I like and that fit my plan.

I know the main reason people have fear in trading is that they are trading with money they CANT afford to lose. I can afford to lose the money in my account. Trading isn't my main source of income, I started trading because markets genuinely interest me and I guess you could call it a hobby of mine that I hope to develop over time. I have money saved up and have low expenses in life right now so losing the money isn't my issue. Scaling down to micros seems logical but even then I still have anxiety entering a trade. So far I've thought of two solutions that might help this "trader anxiety".

1. Trade using a funded trader program. I really would rather not do this as it seems the rules for all these funded combines are meant to keep you paying a monthly subscription for as long as possible. However the benefits of having my max loss be a monthly subscription might be what I need to help get over my fear of losing in the market.

2. See a psychologist. This one was speculative and I'm not sure how viable it is but maybe a psychologist could help me get to the bottom of my fear of losing.

I was wondering if any more experienced traders have gone through the same struggles I am right now and what helped you hurdle the mental roadblock that I am dealing with right now. Any insight would be greatly appreciated!

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  #2 (permalink)
 WoodyFox 
Columbus, Ohio
 
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Shlekht View Post
Hey all,

I don't know how common this is but my problem so far seems to be fear of entering a trade. I'm relatively new to trading and trade NQ and ES using Market Profile. I've been researching and watching the charts using market profile/orderflow for the better part of a year now and it feels like I'm finally getting a good grasp on how the market moves and what clues I can decipher from MGI. However when I see a setup developing I really struggle with entering the trade. This fear of losing just paralyzes me and I find myself in a loop of "what if's" that prevent me from taking setups that I like and that fit my plan.

I know the main reason people have fear in trading is that they are trading with money they CANT afford to lose. I can afford to lose the money in my account. Trading isn't my main source of income, I started trading because markets genuinely interest me and I guess you could call it a hobby of mine that I hope to develop over time. I have money saved up and have low expenses in life right now so losing the money isn't my issue. Scaling down to micros seems logical but even then I still have anxiety entering a trade. So far I've thought of two solutions that might help this "trader anxiety".

1. Trade using a funded trader program. I really would rather not do this as it seems the rules for all these funded combines are meant to keep you paying a monthly subscription for as long as possible. However the benefits of having my max loss be a monthly subscription might be what I need to help get over my fear of losing in the market.

2. See a psychologist. This one was speculative and I'm not sure how viable it is but maybe a psychologist could help me get to the bottom of my fear of losing.

I was wondering if any more experienced traders have gone through the same struggles I am right now and what helped you hurdle the mental roadblock that I am dealing with right now. Any insight would be greatly appreciated!

Well, this is probably not what you want to hear…but being a discretionary trader, you must rely on yourself with trust. Confidence would be key in your decision making. If you are scared to enter, you do not trust yourself and your knowledge means very little. Try putting the trust in a statistical edge developed with your type of risk, reward and styles in mind. It is much easier to trust math found by statistical consistent trials over time. Using market profile would not be the easiest starting point for this method either. Its hard, if not impossible, for most people to use market profile for a statistical edge. Some can though, but it is rather hard to back test. Always trade with a micro until you feel confident in a system, and please stay away form the so called prop firms.
In short, fear is not the underlying problem.

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  #3 (permalink)
Shlekht
Anchorage Alaska
 
 
Posts: 2 since May 2022
Thanks: 9 given, 1 received



WoodyFox View Post
Well, this is probably not what you want to hear…but being a discretionary trader, you must rely on yourself with trust. Confidence would be key in your decision making. If you are scared to enter, you do not trust yourself and your knowledge means very little. Try putting the trust in a statistical edge developed with your type of risk, reward and styles in mind. It is much easier to trust math found by statistical consistent trials over time. Using market profile would not be the easiest starting point for this method either. Its hard, if not impossible, for most people to use market profile for a statistical edge. Some can though, but it is rather hard to back test. Always trade with a micro until you feel confident in a system, and please stay away form the so called prop firms.
In short, fear is not the underlying problem.

Interesting, thank you for the input. I'm going to switch over to a single micro in hopes of being able to take more trades and collect some more data and confidence. Also curious as to why you were adamant about staying away from prop firms? I'm no fan of them but is their any insight you could shed on why they aren't good.

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  #4 (permalink)
 chipwitch 
Nashville, TN
 
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Shlekht View Post
Hey all,

I don't know how common this is but my problem so far seems to be fear of entering a trade. I'm relatively new to trading and trade NQ and ES using Market Profile. I've been researching and watching the charts using market profile/orderflow for the better part of a year now and it feels like I'm finally getting a good grasp on how the market moves and what clues I can decipher from MGI. However when I see a setup developing I really struggle with entering the trade. This fear of losing just paralyzes me and I find myself in a loop of "what if's" that prevent me from taking setups that I like and that fit my plan.

I know the main reason people have fear in trading is that they are trading with money they CANT afford to lose. I can afford to lose the money in my account. Trading isn't my main source of income, I started trading because markets genuinely interest me and I guess you could call it a hobby of mine that I hope to develop over time. I have money saved up and have low expenses in life right now so losing the money isn't my issue. Scaling down to micros seems logical but even then I still have anxiety entering a trade. So far I've thought of two solutions that might help this "trader anxiety".

I am not very experienced, but I have experienced a lot of fear as you describe and I have gotten much better about it lately. Like you, I can afford to lose what's in my account.

I used to get the same anxiety with only slightly less intensity even when paper trading in a sim account.

First off, consider that the reason YOU feel anxiety could be different than why I do, or the next trader does. My anxiety stems from a fear of failure. In most of my other endeavors, I always felt like I couldn't fail because I was in control. When trading, the market has the control. Watch Mark Douglas' 4 part series. It's about the psychology of trading. It will give you a good foundation to start understanding your own psychology. https://www.youtube.com/watch?v=QgaTlTfQnZI
It really helped me. I think he is the one that illustrates that we are raised to perform in absolutes. Like getting a grade for a test. Gotta get that "A". Perfection is an impossible task in trading. You may know that intellectually, but in practice you find out who you really are.

Second, consider that it could be an unrelated issue. For example. I was raised in a very conservative church. Gambling was a sin. Stock market is gambling. So, all that guilt can bubble up in the form of anxiety. I have been an atheist for 30 years and I don't think the "sinning" was my personal issue, but who knows? It is difficult to understand. In the end, trading has been likened to a mirror where it shows your insides. Some people don't like what they see. Others love that about trading.

Some people here might disagree with me on this, but I have gotten over much of my anxiety by losing. Go ahead, click that button (paper trading, of course). Think of it as doing "drills." Put your system aside for this and just 'play.' The goal isn't to see how much money or points you can make. The goal is to click that button! Put up a moving average on your chart. Enter a trade when you see the bars cross over the MA and then retrace to touch the MA. Go short. Go long. Do it on a 15 second chart if you want. You can do hundreds of trades in just a couple hours. The repetition helps desensitize you to it. Also, you may learn or see something in the charts you never saw before by doing this exercise. Think of it like a pianist warming up their fingers, but you're doing it with your mind. Be careful, though. You don't want to develop bad habits.

I think your anxiety will go away with time. I don't have a great deal of confidence at this early stage in my career. While it seems rational that confidence might be your problem, I don't think it's necessarily so. Of course some measure of confidence comes with experience. But you have to gain that experience first. That paralyzing fear very nearly kept me from gaining much experience.

I agree with @WoodyFox. Stay away from the prop firms. They offer little if any benefit that you can't achieve on your own account. Tax rate is higher in the US (depending on your bracket), they keep some of your earnings, the transaction fees are higher, you aren't actually trading real dollars until you're "funded" (paper trading), and you will be considered a "pro" and have to pay a premium for your live data. If you need rules, follow their rules if it helps you. But you absolutely can achieve the same results with probably less money.

Hope that helped.

Happy trading!

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  #5 (permalink)
 Silver Dragon 
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Going to be blunt... if you have a fear of losing then you are risking too much per trade.. To put it in perspective; think of how much money you would be comfortable spending on a expensive dinner for your family or expensive Christmas gift. That is your limit of risk you should be taking per trade. Anything above that will be uncomfortable and will induce fear.

From my experience, when I first started trading if I lost 100 dollars on a trade I would lose sleep over it. Now that I a better job and more disposable income losing 100 dollars is like taking the family out for a nice dinner. I can simply replace what I lost. Its all about perspective.

Trade within your means. Become rich slowly. This is not what want new traders want to hear but it is the only true path to learning to trade and obtaining sustainable income and wealth.

Robert

nosce te ipsum

You make your own opportunities in life.
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  #6 (permalink)
 ZviTradingCoach   is a Vendor
 
 
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2 thoughts on the subject:

1. This first idea is not originally mine, but I've heard it from someone and it struck me as very true ever since, and if it resonates with you - great.

In many traders, the real fear is not of losing. It's only disguised as such.
What they really fear is failing as a trader.

Notice: Most people experience a "fear of losing/missing out" almost identical to that of real trading - WHEN THEY ARE TRADING ON SIM!!
They make the very same stupid mistakes, have the very same elevated stress levels etc. - even when NOTHING is on the line.
Why? because there is something on the line: their self-value, self-confidece, ego etc. THAT is what they fear losing, more than money.

Every losing streak (or every miss out on opportunity) sounds inside like "DAMN, IF THIS GOES ON I'LL NEVER MAKE IT. ALL MY DREAMS DOWN THE DRAIN".

And even more than that - It's fear of change: fear of of the realization that "I", as "I" currently am, am not making it and probably won't make it without changing something very fundemental in "myself" and how I do things. And that's a very scary realization, and hard on the ego - yet one necessary for success.

This is why "Scaling down to micros" doesn't solve your problem. Nor does sim. Nor will a funded trader program, likely. I'm yet to see a trader have fear problems when trading live, go back to sim/micros, have it "miraculously go away" and then just back to live and make it - without ever tackling the gooey stuff inside head-on and working on it.
I'm all for scaling down (no use throwing money away when things are'nt working), but that alone doesn't solve the problem, and if not done properly - may even hinder the solution.

2. The solution to trading fears is to face them head-on. ALL trading problems are in some way or other fear-based. And just like other fears in life - be it darkness, dogs or whatever - you have to do what needs to be done to get over them. No use trying to get around.

There are various techniques for this, but ultimately it's continuous self mindwork (either guided by someone experienced in both trading and mindwork, or by yourself). It requires working on your mental state AS AND WHILE you trade, as well as in REFLECTION after your trading. By working properly on identifying mind issues that arise - they may be faced for what they are and cleared. It's messy, unpleasant sometimes, painful sometimes - but worth it.

good luck!

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  #7 (permalink)
 shokunin 
Manchester, United Kingdom
 
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Most people put greater emphasis on a loss than on a win. The theory is there are two states the brain can be in; forward thinking (dopamine) and present thinking (serotonin, adrenaline, etc.) When you consider a win, it only affects your future and is irrelevant to the present. But when you consider a loss, it affects both your future and the present - a double concern! Here is a nice video that sums this up:


I think you just need to work through it. Start small and keep pushing yourself. Talk out loud and say to yourself 'If I'm wrong, all I will lose is $20 (or whatever), why am I getting so stressed over $20, just do it'. Keep practicing and eventually the feelings will subside. It may be helpful to trade with someone, maybe a friend or partner, or in a one-to-one with another trader on Zoom or Google meet. Being able to talk through your strategy and reasons for getting in the trade makes it real, and therefore less likely for your brain to blow it out of proportion.

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  #8 (permalink)
Symple
Zuerich / Switzerland
 
 
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This topic is an oldie when it comes to trading, but current at any given time for many traders. Thus: Very good and always interesting topic..

What I am about to say now will probably not suit everyone and is only one aspect of the whole universe of how we humans can perceive losses and how we have to deal with them afterwards. Both statements are mainly from the psycho logic universe.

Two statements about this that I have taken with me in the past:

First statement was from a trader from Asia he once told me when it came to this topic:

"Love it or look at it positively to lose and then you have no more pain with it. However, you must then also do your homework and analyze where the mistake was."

The second came from an inventor of games. His statement was the following:

"Whenever I win a game it's great, but in most cases I learn less than when I lose a game. When I lose a game, however, the learning effect is the greatest and that's why he was never disappointed when he lost a game."

Symple

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 bobwest 
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I think that @Symple had it right, as did many others: you are going to lose sometimes in trading, and you will need to just embrace it if you are going to learn anything. Nothing is going to insulate you from this fact. If you can face that and learn from it, you may do well (or not, I'm sorry to say), but if you don't, then you certainly won't.

This is not exactly something that requires professional psychological help, at least in itself. If it were, we would all be seeing a shrink . The fact is that trading requires confronting and dealing with uncertainty, and that means there will always be a risk of loss -- in fact, a certainty of loss some of the time. Controlling the actual dollar loss and keeping it less than your profit will do wonders for your fears of losing, but you will need to be in the game for this to work for you. And initially, you should expect much more losing than winning.

So you will have to just expose yourself to the risk, essentially, and learn from it. Another issue is, of course, whether the method you use can get you any profits in the first place. Both method and its application are the parts of the puzzle. The method has to work acceptably, assuming good application. The application part depends on you: your skill level, objectivity and other personal issues, including the "psychological" ones. You'll need to learn in both areas. Both will require engagement with the market and with its risk, at some level. Use some form of engagement that is acceptable to you.

Of the available options for where to start, I think that @WoodyFox's advice of trading micros (one contract only) is the best. You will have true risk, not the imitation provided by sim or by a prop firm evaluation Combine, and you won't be hurt too badly. But sim is not a terrible idea, if you can use it for experimentation and if you wean yourself off it when you can, and the prop firm Combine-style trials are not terrible either, as a half-way point between sim and real. But I think they are less ideal than just trading micros for most people.

(The prop firms get a bad rap because the fees are obviously part of their business model, and because traders pretty reliably fail out of them, and then grumble about the rules being unfair. The rules generally are something like, "If you lose x amount, you will fail," and then the traders do lose x amount, which is to be expected. All traders will initially lose, in sim or live or in Combines, and this is not really a surprise. Like any other option, it can be useful as a learning experience. But low-contract micro trading is usually a better learning choice, in my opinion, because of the fact that it's real. Also, I think @chipwitch is correct about the long-term drawbacks of the prop firms as a way to trade full-time, after funding, but that is another subject.)

I think that if you steer in the direction of embracing the uncertainty that is part of this fear that you naturally feel, you will be taking a good step, however you do it.

Bob.

When one door closes, another opens.
-- Cervantes, Don Quixote
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 Anagami 
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Simple thought - where there is ego, there is fear.

You are never in the wrong place... but sometimes you are in the right place looking at things in the wrong way.
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