FEAR

I have found a trading systems and it works very well. My problem is when I need to place order, I always feel fear in losing the money. Even my system ask me to sell 3 contracts, I will go to sell 1 only. I know my system works and it is proved. I still lack the confidence. Why ??? Could anyone give me some suggestion to improve it ?

Thanks

Yes most of us undergo the same fear phase. Its part of trading. One thing you can do is share your system with some one who already is day trading and get their opinion too. That will boost your confidence.

That's a tough question. How to improve or alleviate the fear of losing money when taking a trade?

First of all, you know that any single trade that you might take could be a loser. But over a series of trades you're going to come out ahead. Perhaps your system gives you 60% winners. That would mean that 4 out of 10 trades will lose money.

Perhaps if you consider that each losing trade is one step closer to one of the 6 out 10 winning trades that might help?

Perhaps your fear will dissipate over time as you see the system work time and again.

If the rules are working and you can explain them to someone then it might be worth your while to employee someone to trade for you. Give them a strict set of rules to follow and then reconvene with them after trading each day.

Just some ideas...

Thanks for all your kindly advise.

You might try focusing on the mechanics of the trading process, rather than the signal being produced by the system, or trying to figure out on the fly if one signal is more likely to be successful to than another.

View the entry signal as a small part of the overall process of trading.

You might write out each step in the trading process, then make a checklist from that. Then each trading day you focus your attention on following the checklist for each trade. Within this will be the actions to place live orders in the market, where the mechanical act of placing orders is given less emotional focus.

Apply your checklist using a simulator first, only move on to live trading once you have the checklist and mechanical process smoothed out and working well. Doing this will help you build some confidence that you can follow the system consistently, and this consistency will result in a favorable outcome over time.

Confidence will come in time as a result of success, where in this case we define success as consistently following the checklist.

mak: How are you doing on your journey to address the fear issue? I've just remembered about a few excellent videos that I saw on NQoos site Trading Naked that dealt with fear and overcoming it in any aspect of life not just trading.

It's called Emotion Freedom Technique and you will find further details here.

The most impressive video is the last one where he actually walks someone through doing this who is afraid of water. This is the last (very large) video.

Mak,

This is a common problem among many traders. And probably one of the major differences between the successful traders and the rest. It will take some time to build up that trading confidence. If your system tells you to place 3 contracts, place 3 contracts, period. When you make the decision to only place 1 contract, through repetition your actually training your mind to only place 1 contract. Your conditioning yourself at that level and it will get even harder to place 3 contracts. We all feel fear, even the worlds top traders. The best way to grow as a trader is to feel the fear and do it anyway. As long as everything lines up with your system, risk control and money management rules. I recently wrote about fear in my latest blog post. It may help you out some:

What really is fear? Simply puts it’s, forecasted emotions appearing real. Day trading commodity futures can be a fast paced game that can be relentless to say the least. In having a more clear understanding in how to approach fears regrading trading will vastly increase your odds of trading success. As human beings we all experience fear, even the worlds most consistently extremely successful day traders have this emotion. The difference is what top traders do about the feeling that differentiates themselves from the competition. They have learned at an unconscious level to feel the feeling of fear, and do it anyway.

Is fear preventing you from taking trading action? Fear can have control over immobilizing acting on trades, taking profits before your target is hit, entering a position that is not in line with your system afraid of missing a large move, and many more negatively controlling behaviours. So what do you do? When fear can have such immense power over controlling your trading actions, what’s the best solution? It’s really quit simple, when the market generates you an opportunity, never ever let fear stop you from acting on that trading opportunity, period. Consciously being aware of the feelings of fear is the first step to controlling fear. The next step is taking your attention into the fear, then be fully present in it. What this will do, is cut the link between the fear that your feeling and your thinking. Do not let the fear rise up into your mind, use the power of the present moment. Going back to what fear is; forecasted emotions appearing real. Day trade in the present moment and fear cannot survive in your mind. Day trading in the present moment is the only way to not have fear of the future or guilt of the past control your thoughts and actions.

Begin to treat acting on your trading edge as building your risk muscle. Just as when exercising your muscles they have no choice but to grow, your risk muscle will do the same. Through repetition on a daily basis of setting the fear aside and building your risk muscle, you will at an unconscious level overcome fear more easily and quickly. Fear will always be apart of every trading decision because every trade involves risk. It’s what you do about that decision, in that exact moment, that will make the difference in the future.