[Psyc] How Fear Causes a Setup to Fail!

I though this question about “fear in trading live” could help other people benefit from this obstacle in trading as well so I asked Peter for permission to post this.

The rest of this commentary is from Peter, I will respond in the comments. Please add any thoughts or experiences too.

I am new to your site and blog. Basically I am pretty ok with technical analysis and have my own system and setups. The ONLY problem though is psychological :( Fear fear fear still gets me to jump the gun, enter too late or exit too soon of trades, also using tight stops that ruin my setups! Hope you can have something to say about that. Here is a pretty good example of that:

I Made the same trade both on REAL and DEMO account! On the real account entry and set tight stop, even after few minutes I closed 1/3rd of the position, coz I didn’t believe in it. Then the stop gets hit!

On the DEMO which is risk free, fear free environment I let the trade develop EASILY!!!

Furthermore, I knew my stop should be below the recent low (yellow line) and still set 5pips stop!

That kind of ridiculous results e.g. being profitable on the DEMO and BE or losing on the REAL account happens often!

I know it and still get me :(

Hope you can advice and tell your other followers about it! Emotions MUST be controlled (especially fear) or good results will never come!

About Jordan Above of all I am a husband, a father. I am also a trader. Here is my advice. Trade what you see NOT what you expect. Price is everything. Think like a fundamentalist; trade like a technician. No emotions. No guessing. Learn to read the charts and use awesome $ management. Work with me and I’ll show you what works: 31 Days To Profitability
  • Reply Jordan Lindsey December 3, 2012, 10:36 pm

    In order for emotions to be controlled every aspect of your trading must be completely controlled.

    Let’s start with a few of the most important for you and we can keep moving forward.

    Decide = Are going to trade on a demo or live account first?

    Since you mentioned that you are new and just starting to learn it is a pretty clear choice to trade on a demo ONLY.

    Now before taking any trades I want to know exactly which trades you are going to take and why?

    We need to have a complete trading plan in place so that you emotions can be taken out of the equation.

  • Reply Peter December 3, 2012, 11:40 pm

    You see, I use the demo trades when I am not sure. Or to watch how the emotions affect my trading (e.g. taking profit earlier on the real account, getting out early with a small loss instead of letting it develop, etc.). Then I can compare and see the difference between the two worlds the real and the risk free one :) I know that this is the only thing that keeps me away from being constantly profitable. Just need to overcome it somehow. It is difficult though…

  • Reply Jordan Lindsey December 4, 2012, 2:01 am

    Have you thought about focusing on a demo and actually putting together a trading plan. You will have a better chance at success if you approach the market systematically. The first you need to figure out is with what position size(s) you are trading. This will depends on many things. To get started let’s focus first on what is your account size (demo), how big is your avg stop loss, how big is your average take profit.

    1. How big is the account.
    2. Avg stop loss
    3. Avg take profit

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