My analysis is good, I see the setups working, but time and again I find myself NOT taking any action when the setup appears. In my mind I am confident about the setups, but when its in front of me, I am blank. Please help on this front, some source, some motivational videos/articles/ some powerful messages that can change my attitude/ anything else that you would like to suggest. This is the only barrier affecting me by and large until now.
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Wonderful question, my friend. Love answering these kind of psychology related questions in tradingqna (most essential but forgotten aspect of trading)
There's a saying that's been used in pool halls and poker rooms - if you gonna sweat it,then don't bet it. Don't get me wrong here..it's good to be a little nervous because it keeps things exciting and in perspective but if you see your setups working again and again in a consistent manner and you don't put on a trade - that's like having the "the upper hand" in anything that involves winning and you are not betting. It's like giving all best batsmen to your team and no wicket-keeper behind you, it's like spotting Tiger Woods a 10 stoke lead, it's like getting a Royal Flush when the pot is maxed out. Bottomline -Â just got to do it. But, as you know already, its easier said than done unless we know and address the root causes.
The condition you are experiencing has been experienced by 100% of the traders and by some veteran traders as well (when they implement a new idea). It is commonly known as 'fear of pulling the trigger'.
Before doling out solutions, we need to understand the psychological aspects behind this fear
1. Fear of loss
We can break this fear down into two distinct psychological characteristics:
1. Lack of confidence - encompasses all things associated with a trade â the whole nine yardsâŚstarting from analysis, methodology for trade selection(mechanics) execution and a plan to handle exogenous events.
2. Lack of discipline - encompasses all of the above but with direct focus on self, and your ability to react, either in accordance with a specific set of "rules", or to unexpected, unanticipated scenarios.
2. Fear of winning - this fear may sound funny but this is very much true as any other fear involved in trading. This fear can be broken down into a plethora of psychological characteristics, all of which can be clumped into a single fear - fear of change.
Fear of change involves all aspects of your life at this moment -
1. winning will make you more desirable financially and-or personally (aspect of relationships),
2. you believe you are not entitled to win (aspect of self-image),Â
3. a successful career means more responsibility (aspect of personal growth).
The possibilities of why you would fear change are nearly endless. However, the reasons are completely unique to you. There is no trading specific material for this. Self-help books and reading material might help a bit.
3. Urge to make money faster - this urge can make us not want to lose in any trade. As losing equates to lesser capital than where we started. This urge can also stem from the fact that our livelihood depends on the money we make from trading
4. Mechanical vs Discretionary system
If you are a discretionary trader, you're probably suffering from a condition that golfers suffer from time to time : the yipps. The yipps, in case you don't golf, is a putting condition where you get so anxious over where the ball is going to go that you get janked up before you hit it. It's typically a fear of blowing it past the hole. In other words, fretting about the result even before we hit the ball. Usually a golf instructor would say - swing smoothly and keep your head down. A discretionary trader goes through 'yipps' more than a mechanical trader. Mechanical traders face some other demon - second-guessing the system. If your system is mechanical, 'yipps' wont be present that much.
Possible solutions to these conditions
1. Back testing would obviously give you confidence to pull the trigger but what would help you when you face a losing streak? Thatâs where reducing size would help us. Start out out with 1 lot, follow the system to the dot. It is really important because it creates that âdisciplineâ brain muscle in us. And, slowly and gradually move up in size. Remember, we are all in this for the long haul..no hurry. But, if a trader is in pressure to make money right away(and big), market will show him the road to adversity.
2. Reduce size I canât stress this enough as over-leveraging has the power to decimate trading accounts
3. Most of the newbie traders have the strong urge to make money(who doesnât) but this can act very counter-productive to our efforts. Do not trade for monthly expenses (you can start withdrawing money for your expenses in the later stage but not when we have issues in pulling the trigger. So, please have backup money (to cover expenses for 3-4 yrs) while you learn trading.
4. Little tuning to our mindset will also go a long way in our favor. Whenever you have a setup, the first thing we can start telling to ourselves is that  "this is going to be a losing trade and I am going to get stopped out on this" . We EXPECT to lose on this trade but we don't HOPE to. There is a difference between expecting and hoping. We HOPE to win on this trade but we don't expect to. When we lose, we are ok as we expect and prepare for it. When we do win, we give a pat on our shoulder since we expected to lose. Tomorrow we will start all over again -  expect to lose but hope to win.
Good luck and update us on your progress after 6 months. Hope it helps !!
Â
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NICE ANSWER THANKS A LOT.
I HAVE SAME PROBLEM AS MY SYSTEM WORKS FINE BUT I AM NOT TRADING DUE TO FEAR OF LOSS. BUT NOW I FEEL IN BACK OF MY FAIL IS MY STOPLOSS WHEREAS, WHEN I AM GRADY MY TARGET PRICE HITS WHICH HELPS ME A LOT.
SO ALWAYS TRY TO PUT YOUR SL AND TG ON SYSTEM NOT IN YOUR MIND.
TRY IT.ITS WORK FOR ME.
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Not putting the trade even after much analysis and theoritically 100% of the trend ?
The reason is purely of two kind
-
Fear of failure : This is no-nonsense down to to earth issue with every one. As a living being no one wants to be proved that he is a failure even within the closed walls of his room. One can talk much trend, indicators etc theoritocally. But the proof of the pudding is when the knowledge is put to test - and at the back of the mind., deep inside no one really likes to be proved wrong, which is what happens if the trade ends up in loss. Bluntly put this is cowardice on one hand and on the other one wants to bask in his mental glorifcation. In short FEAR of BEING PROVED WRONG
-
Not just Fear Loss, Fear of loosing hard CASH
Unlike normal business, Share market is a place where courage will not bring in cash, but will actually end up in loosing it. And 95% of will never be recovered. In fact 95% of the traders, retail in particular end up in loss eventually. Those who make it also may loose it. Most of those venture into this knows this trend and are most warned by their friends and relatives constantly.
So if they loose the trade they NOT ONLY loose money, they loose their face too.
Then there is one of the most important matter regarding the brain.
Rashness and speed of reaction.
Each person has a certain level of speed to react and taking decisions. It is like driving your car. Though most may not have given much thought to it, driving a car is mostly taking split second decisions so that accidents will not happen and reach our destinations safely. Trading also is like driving that car. The difference is that even if the car is damaged, we will have money to repair it , but in share market crash, we ARE losing MONEY - So no money to repair the car. The realisation of this difference is what prohibits many from punching the button at the last moment.
There is element of rashness or we can risk taking capacity in every one. When most like to be on the safe side (A bird in hand is better than two in the bush), a few actually shall jump into it. Though they may not get the bird, they may get something else, lost by some unknown person. This urge to explore the UNKNOWN and hope to get something out of it, is lacking in many person.
Indians in particular, are family bound. So they have to look behind them, people who are lined up behind them, before taking the plunge. Those who are truly independent will not have this issue,
The best way to tackle this is to take small steps : Fortunately Zerodhaâ s brokerage is less, so one can afford to trade in small quantities and gain confident over a period of time to do larger trades.
Remember: how ever much one has studied the scrip and is confident of the trend, NEVER trade without a Good 1 minute CHARTING SOFTWARE. The trend in Indian Market can change at the flick of a button.
NEVER BORROW money to trade in share market.
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- Keep a small and tight StopLoss in the system, not in mind.
- Take a very small trade size.
- Belief - strong belief, that you will win/profit
- No TV, no newspapers, no email, no tips etc.
- Plan your trade, trade your plan. Strictly stick to your plan/strategy.
- Be mechanical, don't bring in emotions.
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hey hope this video helps.
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to be good is psychology u can read some books if u r interested discipline trader and trading in zone by mark Douglas and do meditation it may sound hilarious but to be good trader u have to be patience and peace inside physcology play 70% role and system 30% all the best
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stop thinking about result. go do your best.
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Try to become a Technical Analyst not a Trader ⌠
Do paper trading with a solid strategy until your mind settles into comfort zone.
For truely 2D & 3D integrated trading techniques feel free to download 100% free professional intraday trading strategies here : http://intradaytradingsecrets.blogspot.in/
Preparation is the Key here. Make your trading rules more mechanical i.e. plan what you are going to do well in advance.
Trade & Know What you are Good At - Trade YOUR setups and patterns i.e. the one you are good at.
Know & Manage your Risk Well in Advance - Know where you will be placing your stop losses to manage risk well in advance. This will help you understand and evaluate what you are going to gain and risk on that trade. This will put you into a comfortable zone to evaluate the return to risk.
Reduce your Trading Stake - Reduce your trading size to as smallest as you can. And when you feel you have overcome your weakness then start increasing the size to higher numbers. Refer this - Have you ever Wondered why Starting Small always Work in Trading Business?
Keep Your trading with yourself - Fear of letting others know your losses. Avoid that.
Learn from Other People Mistakes - Know about Legends who did well in trading business.
& Lastly, Make Mistakes & More Mistakes But Don`t Repeat them.
To Motivate You:-
Instead of learning from other peopleâs success, learn from their mistakes. Most of the people who fail share common reasons(to fail) whereas success can be attributed to various different kinds of reasons. - Jack Ma
This is my advice to the young people: 25 years old, make enough mistakes. Donât worry! You fall, you stand up, you fallâŚenjoy it! Youâre 25 years old, enjoy the show!â - Jack Ma
Make Enough Mistakes, Any mistake is a wonderful revenue for you.
Also refer these below :-
Top 10 trading mistakes via Futuresmag.com
The Inspiring Story & Philosophy of India`s Most Successful InvesTrader- Rakesh Jhunjhunwala via Justtrading.in
Top Trading Mistakes via dailyfx.com
How to Overcome Biggest Human Mistakes & Weaknesses in Trading via Justtrading.in
12 Step-wise Trading Rules for New Traders to be Safe in the Market via Justtrading.in
4 Trading Fears and How to Overcome Them via moneyshow.com
Enjoy.
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That is beautiful, thanks Madan.
Hi Madan a great answer with many importent points good jobâŚ
I was pretty much expecting an answer from you Madan, you are too good at the psychological aspects of trading. Your comment helped me understand myself better, just so you know I am a discretionary trader. I am guessing its the âyippsâ that are not allowing me to take the trade. The only solution I see is to have a mechanical strategy. I will need sometime on formulating one and sure will update time to time on the progress. Many thanks for taking the time out to reply
You are welcome. I donât answer that much but your question brought me out of the hole Glad you found it useful Keep us posted.
Thanks alot MadanâŚ
Wonderful Thanks for answering. Helped me a lot. Please answer more in future.
really helpful, i mean it⌠thx