One of the pleasures I get from running a blog like this is the feedback I get from readers. Even the negative stuff helps me to fine tune what I am doing so that I can better help people.
I received the following email from Gary, on the subject of trader psychology tools to overcome Fear.
I think Gary’s approach is excellent. Rather than go to pieces or just plain give up, he has shown the kind of resilience traders who finally make it always exhibit.
He has applied his brain to the question of what he can do to turn his trading around. He has taken on board all that he has learnt from others, and made his own way through the maze of psychological stumbling blocks.
Have a read and see what you think. Does any of this resonate with what you do? Does it give you any ideas? Tell me what your own approach is in the comments below.
Thanks for this Trader Psychology Post on FEAR!!
I read all of your newsletters. They keep me motivated and always provide me with some insights that I can use to improve my trading.
I was in this boat of FEAR for quite a long time but once I made a few changes to my strategy and my mentality things began to improve.
From a strategy perspective:
1) I switched from doing counter trend trades to only trading with the major/dominant (ie Higher Timeframe) trend
2) I moved my take profit from 1X to 3X
3) I started buying the pullbacks instead of waiting for the breakout
These 3 changes moved me into positive expectancy. But I still had a fear of pulling the trigger.
So I sat down and developed my own Psychological Tool/Matrix that I call FEAR OF POSSIBLE OUTCOMES. Basically, in order to eliminate MY fears I had to identify them first.
In the end there are only 4 things that are going to happen when you, me or anyone enters a trade:
1) POP – You enter and the trade pops and moves in your favor (great outcome 3x)
2) SOFT Pull Back – You enter and the trade does a soft pullback but does not take out your stop (also a great outcome 3x)
3) HARD Pull Back – You enter and the trade does a hard pullback and takes out your stop (more frustrating than bad – but here you just get back in. I call this my Keep Swinging Strategy. I wasn’t wrong I just got to the party little early. LOL)
4) REVERSAL – You enter and the trade does a trend reversal and takes out your stop (here you are frustrated – but glad that your stop worked and got you out of a bad trade)
So, I just developed contingencies for #3 and #4 and now my fear is gone.
Now I know that when I get in:
a) Higher Timeframe momentum is on my side and
b) if I win its at a 3X R:R and
c) if I lose I just get back in.
Now, it’s simple. Now I feel like I have some level of control. Finally, after many years of practice I feel like I’m RUNNING A BUSINESS.
I know this may sound silly to you but understanding the POSSIBLE OUTCOMES has really helped me develop an unemotional perspective on the markets and has greatly improved mind set.
Thanks for all your hard work.
All the best,
– All I can say is, Well Done Gary!
And to those of you reading this, don’t forget to leave your own feedback below 🙂
Take Care & Trade Well,