Have seen this happen to many traders in the past ... and it affects traders differently ... but the end result is the same ... you can't pull-the-trigger.
This might help some, from my trading related ebook "Trading Plan ...wozzat?" ... Chapter 2:
Are you trading markets or emotions?:
Tuition in these markets can cost thousands of dollars in market losses & many hours of study, but learning to trade properly and profitably makes the investment worth the efffort, in both time and dollar terms.
Here's a different approach to the markets and "knowing yourself".
Trading these markets requires committment to study and a realization that traders are not successful overnight - just like learning your first trade. Maybe it took you 4-5 years to learn as an apprentice (mechanic,carpenter,painter,etc), so too it takes time (& effort) to learn the BASICS of trading successfully. Then, if you want to be a good tradesman (trader) you must keep up with the latest technology in your trade - again, this is an ongoing committment to self-education.
Not everybody has a temperament suited to trading the markets.
Most traders are very emotional about their trades, especially in their early experience - this may well be the main reason for the high attrition rate amongst new traders.
Overcoming emotions can only be done by experience, that means trading, trading, trading........
Sorry, paper trading can only teach you about the methodology of your trading system & the idiosyncracies of the markets - to learn about yourself, you must trade for real.
Here's a discussion on HOPE and FEAR - just two of the emotions to affect traders daily.
Hope & Fear?
Posted by Noone on Sunday, 5 March 2000, at 4:31 p.m.
We all hear that hope & fear control the markets?
1. Can anyone explain one or both?
2. Can either one be seen on a chart?
3. Can either one be explained enough, to be able to write an indicator etc. to be shown on a chart, that will help in trading?
4. If it can be seen, is it too late to use, or would it be helpful to a trader?
Anyone have any ideas or explanations of Hope or Fear as far as trading?
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Posted by yogi on 06 March, 2000 at 18:58:06:
Hi Noone,
Not sure where you are going with this, but here goes:
1. HOPE is entering a market without a trading plan.
HOPE is holding a position after it has blown through your stop (if you had one).
HOPE is holding that 3-day trade for 3 months or more.
HOPE is watching a market approaching your PRICE STOP, long after your TIME STOP has expired.
FEAR of loss is not pulling the trigger, when your system posts an entry signal.
FEAR of getting out too early is not pulling the trigger, when your system posts an exit signal.
FEAR of missing a trade is being in a market before your entry signals have been confirmed.
HOPE and FEAR are two of ten emotional words that should never be part of a trader's vocabulary.
GREED, EGO, "Coulda,woulda & shoulda" being the another five negative trading words.
2. HOPE & FEAR can always be seen on the chart of any market - it's called the PRICE.
3. To represent traders' emotions (HOPE & FEAR being just two emotions) in an indicator, then that indicator would need to accurately reflect the variations in such emotions. This is measured by the Law of Vibration and the Law of Resonance, both of which are reflected in PRICE, so no need to write a new indicator - just use the one you have more effectively.
4. PRICE (a measure of traders' emotions) can easily be seen and is never too late to use, in a well-laid trading plan, which is most helpful to all traders.
Control your emotions (including HOPE & FEAR) and become a better trader.
A portrait of FEAR can be seen in a chart of the Australian Gold Index, which reflects many traders'
FEAR of LOSS as they sold out of physical gold from 1996 to 2000. Three moving averages --------->>>
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Overcoming the fear of being unable to pull-the-trigger may be done in several ways, after doing your normal research, in preparation to trade:
Practice picking up the phone and calling your broker to place the trade ... if necessary, close your eyes and practice this in your mind first ... SEEING yourself placing the trade, about six times.
If you trade online, open up your order page, disconnect from your ISP and practice hitting the "BUY button".
Still feel apprehensive...?? Get somebody else to make the call to your broker for you or place the order online ...
Review your trades at the end of the week or month and note what you did right with the winners and what went wrong with the losers ... this will help you to fine-tune your trading plan to the point, where it becomes second-nature and your confidence in your methods is restored.
Nobody says it will be easy, but the only way to overcome your fears is to face them ... and it's no different in the trading arena ... just DO IT !~!
