Become a Successful Trader

December 20, 2011

Ask the Reader: What is Your Biggest Fear as a Trader?

Attitude influences behavior.

You can conquer almost any fear if you will only make up your mind to do so. For remember, fear doesn’t exist anywhere except in the mind.

Dale Carnegie

List your fears, get to know them. It is only when we confront our fears head on that we can overcome them and move forward.

In this post I ask you, what is your biggest fear as a trader? And how have you been able to overcome those fears? It’s okay if you haven’t found a solution yet, one may arise in this post.

Use the comments section below to share your thoughts.

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About Tim Racette
Tim Racette is a day trader of 15+ years in the E-mini futures and swing trader of stocks. Mountain biker, lover of the outdoors, and explorer. Tim is an ASU Sun Devil and a Chicagoland Native now living in sunny Scottsdale, AZ.
  1. Fear of loss, fear of failure, fear of missing out? I’d like to know what you think.

    • My biggest fear is by far, the fear of failure. With the economy being the way it is I know that if I fail, there’s not much if anything at all waiting for me on the other side.

      I know Michael Jordan would always say that he’d rather try and fail then not try at all. And I agree with the premise, however Jordan had a whole world of options waiting for him if he failed at a certain endeavor.

      The average joe especially in this economy, unfortunately doesn’t have that type of luxury.

      At least that’s the way I see it. Thanks Tim!

      • You are where you are as a result of your experiences. Trading provides so many incredible lessons. I’ve found myself carrying the things I’ve learned along the way into other aspects of my life. Any great athlete (or trader) will tell you mistakes are a part of the path to success. The only way to fail, is to not learn from them.

        Keep sight of the bigger picture and where trading fits into your life. Learn by doing and grow everyday are my two motto’s.

  2. I had no fear of loss when first started trading. I started trading in 2003 when you could throw a dart at any stock and it was going up. So I confused a bull run with my ability as a trader. In 2004 my lack of trading skills humbled me when I had a losing streak of 13 consecutive trades. I lost all I gained in 2003 plus 50% of my starting capital. That left me with the fear of loss which set me back a number of years and has been my largest obstacle to overcome. Proper risk control and money management would have helped avoid or reduce my early issues. But like many traders I learned about them after the fact. Trading physiology, risk control, and money management should be learned before one ever looks at a chart.

    • Great points Jeffrey. Unfortunately for most it takes a large loss or market crash to force us to take a deeper look at our trading. I think there is value in the reduced size winner. Not to say it is a “small winner” in terms of quick profit taking, but small risk, smaller reward. Building that consistent base and confidence in your trading system those small but consistent profits can be maximized quickly over time. Luckily you’re still in the game, more that can be said for most traders.

  3. Sometimes I have trouble pulling the trigger. That is my biggest fear.

    • Hi Kenny, that’s a big one. From what I’ve read on human behavior and market psychology I truly beleive that our subconscious is what produces that hesitation. Whether the fear be tied to something totally unrelated to trading, such as the fear of loser, or the fear of failure as a whole. What I would do before I took a trade is to visualize the amount I’m risking, and imagine I was just stopped out. If this alone makes you nervous then you should think about reducing your size. I felt that this exercise before placing a trade (imagining the worse case scenario) helped me stay calm during the trade. If I did get stopped out, that’s fine, I already accepted the loss. If the trade worked in my favor, even better because I expected a loss.

  4. I never had a fear of failure. And missing out? That more annoyed me than anything else. As with most anyone, fear of loosing capital is the biggest hurdle. I am in my third year in the futures market. I manage some wins throughout the day, but the end of year statements prove the pudding. In 3 years I have effectively lost 50% of my capital. I am now at the point where I am so nervous that I generally am paralyzed while looking at the DOM and charts. Even though in my mind I see the setups, I don’t take them and “paper” them. 80% or so they are winners, and I sigh.

    • Decreasing my position size when I’m less confident or during losing streaks was a big help for me. Although I feel in the futures markets the minimum contracts you need to be able to take consistent profits is 3 (due to the ability to scale out). Another option if you trade the Index Futures (ES, YM, TF, NQ) is to switch to the equivalent ETFs (SPY, DIA, QQQ, IWM). There’s no worse feeling than taking a winning trade on paper, then switching to a live account and taking a loser. Trading the index ETFs in blocks of 500 or even 250 shares will allow you to be “in the game” and most importantly, to scale out (which is why 1 contract traders have such a difficult time trading futures).

      The other thing I did to help build my confidence is review the trade setups for the day each and every night. This helped me reduce that fear as I was able to see them working over and over again. We’ve all been there, you’re definitely not alone. Happy Holidays!

      • That is exactly the posture I am in now…I trade 2 lots in the TF and ES. I take one for a point, move my stop to 1/2 and if I am on the right side of the tape I continue to move my stop when it gets a point above, then another 1/2. I have bailed out of trades before they hit my initial stop when I saw it was going against. The other thing I have been doing is if I feel it is not moving fast enough I will close the trade for a 2 ticks in the ES or 5 ticks in the TF. A little green is better than a little red. I cover the cost of the trade and make a buck or two. Good for the confidence.
        Unfortunately, I do not have access to the ETF’s. I am with a futures only broker.
        Merry Christmas!!!!

        • Write down on a post it not, ‘ANYTHING CAN HAPPEN’ and stick it next you your computer. While you may feel as though sometimes your intuition is correct and you make the right decision to get out of a trade early, I beleive in the long run it will cost you. William Eckhart is quoted in New Market Wizards as saying” One common adage..that is: You can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits.”

          While it totally depends on your win % and avg $ winner and avg $ loser, I’ve found that giving up a few +2s for say, a -4 allows you to take more +12s aka larger winners. Leaving a little bit wider stop at the onset of the trade will give it the opportunity to move away form your entry price and with the ES, that’s huge because it does so much backing and filling.

  5. I don’t have any fear but i get nervous when I get few losses in a row because my account is less than $5000 and my knowledge of the market isn’t that great the most important is that I AM learning.I do panic when I lose the internet conection

    • Spend the time to work through your methodology on a paper account Rab. Once you make enough trades (at least 100) you will have a good idea of your win/loss % as well as how much you can expect on each winner/loser (on average) this helped me get through those draw down periods where I had a series of losers in a row. I knew statistically a string of winners would be just around the corner.

  6. Small winners and Big losers!

  7. Spending a lot of time paper trading worked out best for me. In addition, I started video/screen recording all my trades as well as keeping a daily trading journal. I believe these two approaches helped build my confidence as I was able to review later what emotions(fear of loss, being wrong etc.)were at play and what were the reasons for entering a trade. Obviously this requires commitment. Trading is a business and with all businesses you have to become a smart buyer or seller. There are no overnight success stories in this business.

    So I would add, video record your trade screen and while recording describe the emotions and reasons for entering the trade. Review. Adjust.Plan. Execute. Repeat.

    To your continued success!

  8. Based strictly on lifelong results, mine is a fear of success.

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