I want some technics to eliminate fear , some time ago i made some losses, but now i have learn TA and do some paper trading with my knowledge with the accuracy of 65%:35%. even today i have that fear of loss, and i can’t take trade in real time, what is the expect advice to me?
In my view, for every trade you need to decide in advance that where you’ll get out if the market goes against you. And you should never compromise on this. Also take every loss positively, because market teaches you at every moment. Loss today can turn into a big profit tomorrow.
How many real time trades have u done so far?
If it is within 100, the fear factor might still linger with you. So go ahead and do real time trade with calculated losses, if you cross somewhere close to 500-1000 trades, you could see that the fear factor goes away slowly.
Its like attending first few interviews after college, once you have attended more than 10 interviews, your mind and heart gets prepared for what is about to come and fear factor slowly fades away.
There is no secret pill available to get rid of this. If you are in the field and experience it so many times, it would slowly fade away. So never risk your full capital and trade the markets.
Better to start practice up on your patience…wait for the right moment to buy and sell. Also practice to regulate greed…major of traders are loosing their money only because of their greed in nature…be happy in same with the getting of 100rs or 100000rs or more in your trade. Don’t forget profit is your motto…and not loosing the money!! trade more…and acquire knowledge!! cheers!!
Make some real trades.Decrease the position size and the amount of risk per trade.Gain some confidence on your strategy with real money. Nothing motivates you better than your own built confidence on your strategy.
Importantly, don’t face the market with an expectancy of making profits in the beginning of your journey. Sounds so simple, but it impacts alot in shaping your skill.
Understand probabilities, risk 1% of your trading capital, and have confidence in your method. If these 3 are taken care of, fear disappears.
Every successful trader would have gone through this 'fear of losing'. So, you are not alone in this boat. There is no specific technique to counter this fear but we can address the various root causes. All the pointers illustrated below might not be applicable to you but few would hit a nail in your head!!
1. Utilizing 100% of disposable money -- If this is your only disposable money, this fear of losing would literally haunt to the core. Everyone has an humble start and you gotta take it slow. If this reason is the cause of 'fear of losing', then the only way to overcome it is to understand that it exists and have a big cushion outside of trading capital. This might sound counter-intuitive but thats what it is. Been there, done that.
2. Perfection syndrome -- You want the perfect trade..in other words, you don’t want a losing one. Any trade that falls under your plan is a perfect trade..Winning/losing that trade is immaterial.
3. Trading to meet monthly expenses -- If a trader trades to meet monthly expenses in his initial years of trading profession, its going to be extremely difficult to pull the trigger when he is in a losing streak and it has a lasting effect on his psychology. Once he has a decent account size and some capital stashed outside, the fear of losing would slowly subsidize and he would also start becoming consistent in making money.
4. Lack of confidence -- You don’t have confidence in your system or you don't understand how a system works. It is always a distribution of winning and losing trades. Goal is to have small losers, scratch trades, small winners and big winners. To gain confidence, backtest your system thoroughly but more importantly, start real trading with 1 lot for 3 months.
4. Need to make money ASAP -- You have the strong urge to make money ASAP not just for monthly expenses but for other reasons as well. This one thought could play a big spoilsport in our quest of mastering this game.
5. Impact of Drawdown -- You are in a drawdown and has a strong urge to make it back to breakeven ASAP. This can force us to not take trades as any trade has a potential of becoming a losing one. Being in a drawdown is pretty normal but the urge to make it back to breakeven immediately can prove counter-productive to our efforts.
You mentioned that you learned some TA and want to start trading live again. You are in the right track :)
Good luck with your trading and hope this answer would help you a bit !!
Have lots and lots of Money in your Trading account
Build a suitable strategy that works out well for you, fix a stop loss. Stop analyzing too much and place the order. Simple
Psychological Fear is a Symptom and the Cause of it is ‘Uncertainity in knowing how much money tht wud be exactly lost over a period of time’. Thr comes the importance of charting out ‘Risk Capital’.
Reproducing frm my earlier answer:
Accept that ‘Trading is a Journey, Not a Destination’. Trading can be done until Exchange would keep opening everyday in life, it is just tht the money shud be thr in our pocket. I took decision to lose only 5K permonth/60K peryear. I did technical/fundamental studies on NIFTY, BANKNIFTY and USDINR. Then came up with at least 3 strategies on each for that particular month. So, for each of the total 9 strategies, came up with Risk/Reward ratio with numerator(Risk) being constant at 5K. Then choose the best from the rest and play it in the market. If the chosen strategy fails, accept it as you would not come up with that for the cmg months. If the chosen strategy completely loses 5K, keep doing the study but do not trade for that month. Start trading only from starting of the month. Over months, definitely trading got improved and would have lost a fixed amount of money,if lost. Then over year, this trading knowledge is imparted to other securities one by one.
Another thing is, instead of reading books, view trading webinars. I have found useful webinars at this link ( https://www.interactivebrokers.co.in/en/?f=%2Fen%2Fgeneral%2Feducation%2FpriorWebinars.php%3Fp%3Dl ). Trading webinars usually concentrates on different strategies and Trading is just nothing but playing the strategies.
In the trading journey, do not forget have a stopover to have some short break by viewing short videos ( http://www.thedisciplinedtrader.com/ ) or by visiting youtube videos.
exactly!! well said!!
Well said, Jagadeesh.
Can you elaborate more on how to understand probabilities?
See, probabilities means nothing but chance of success. Anything you do holds a 50-50 chance. Say you start a garment business, what are your chances of your success? 50-50, right? You may succeed, or you may fail. One of the 2 is going to happen. India plays cricket against WI, what are the chances of success? 50-50, right? When you graduate from college and apply in companies, what are the chances that you will get a job, 50-50. This 50-50 is what I mean by probabilities.
In trading also, chances are 50-50 that a trade will work out, that’s where risk to reward comes in. When trade fails, you lose 1, when trade works, you make 3(considering RR 1:3) , thus making you net profitable.
I urge you to read this book by Nassem Taleb - Fooled by Randomness.
Thanks for this Madan…
You are welcome
Completely agree, over analysis creates confusion thus leading to negative results.