When I did coaching, I found out that about 87% of all my students where loosing money because of fear, including myself in the early days of my trading career.
- to lose money
- to lose again
- to have a false assumption on the market
- to wipe out the account
- to trap in to a Black-Swan event
- to lose your face in front of your family and /or friends
And there are more reasons, you maybe know by yourself.
To understand how to handle fear, we have to know why it comes up from the darkness and steers us in our face and makes us feel bad...fearful.
Fear arises when we can see situations in front of us, which we already have experienced before. In these past situations, there where also feelings involved. And these (bad) feelings became part of our self.
So every time similar circumstances are surrounding us, these feelings get triggered and we feel the fear again.
Now that we know why and how it happens, we can do something to handle this fear.
The challenge in trading is, that we have to identify the exact part of the situation that fears us.
Let's talk about the fear of loosing money, since it is one of the most knowing fear that a trader experiences.
How can we handle it?
There are two major parts we have to do:
1. We have to know that we WILL lose money in the future. There is no system, no Setup or anything else that makes us winning all the time. We just have to accept it, period.
2. Preparation - Our secret weapon:
a) as traders we have to master only ONE simple Strategy that tells us, that we will make Money over time. In between we will lose, win, lose, win.... But in the end, we bank!
But how can we KNOW that we will make money in the end?
First of all, we don't know...get used to it.
Even if we make our 1000 Backtests.
WE....DON'T....KNOW because there is no way to tell the future, but not because the system won't work anymore. We have to understand that it's just a fact that "we don't know", but it's not telling us per se that it's not worth anything, our setup, our strategy.
If you do 1000 backtests with your system or your strategy and the numbers are promising, then hold on to it and trust it, what ever my come along the way. Because this will be your Money-Bakery in the future!
b) We still talk about preparation. How about, if you start with such a tiny position, that you really not even care if you would loose it. I talk about such a tiny position that is literally ridiculous risible, if you would lose it.
Not possible because you trade Futures?
Stop it...trade FOREX where you can size your positions perfectly, even if you just have $1000 in your trading account. Don't use leverage anymore. Or just trade ONE, yes "1" Stock.
At this Stage of your trading, the focus is not to make money, but to get rid of your fear.
What does such a preparation change? It will reprogram your fear to a level of NIL...non existent anymore...
As soon as you are comfortable with trading bigger positions, you can trade bigger and bigger. Start tiny and move on from here, Bit by Bit, step by step.
I already mentioned KaiZen in another context.
Read Books about KaiZen and master it in every part of your live, and specially in Trading.
How do you proceed from here?
...let me know it ;-)