He didn't say that exactly, but he did say a lot of anxiety comes from the fear of making a wrong decision, which is why it's important to embrace risk and try to use rules to make decisions. For me it's not about money. Having real money involved just heightens the anxiety for me, but even when I'm paper trading I experience the same kind of emotions. When I first started playing poker, I was used to playing with quarters. The first time I played $1/$2, my hands would shake when I put my money in the pot and I would fold anything but aces full when I got raised. Eventually I learned to accept the risk and realize d you're not going to win most hands. I'm hoping experience will make me feel the same way about trading. I think the key is having absolute confidence in your long-term edge. If you have that, the little setbacks won't screw with your head as much. Not to say that you won't go on tilt once in a while when you get a bad beat.
George, In addition to some of the good advice that you have already received, you may wish to read Zen and the Art of Poker: http://www.amazon.com/Zen-Art-Poker...8448867?ie=UTF8&s=books&qid=1191006488&sr=8-1 Please note that I know nothing about Zen and very little about poker. However, the parallels with trading are very interesting. You won't spend a lot of time or money on this book, but I suspect it may help your trading psychology. That it is not specifically about trading could be a plus because the author does not impose any of his own trading biases on you. It will be a few dollars and a few hours well spent.
all advice above is greatly appreciated. I printed it out and will go through each post a few more times. from what I can summarize: - one way is to overcome the fear (many useful hints and books above) - another way is to get used to the fear (built up experience and conserve capital). this will take a few years, but what doesn't? - my strategy may be worthless and the fear is genuine because deep inside I know I stand no chance with the strategy - a combination of it all Monday I will go 'fishing': I will predefine ONE setup and will trade it ONLY if it shows up on the ONE instrument I am following (throw in the bait and wait). Contract size will be very small. No impulsive trades this time. I will let you know how it went. many thanks again for the most valuable comments. cheers, George
This is an easy problem to solve. Just take your trading opinions, work out what your equivalent "paper money" trading positions would be, then pick up the phone or load up your trading software, and place an identical position with real money. If this is too scary for you, then just do it with 1 lots for a while, and slowly increase your size as you gain more experience and confidence in your abilities.
Wrong. -------------------------------------------------------------------------------- To the OP, good luck. I found that keeping a detailed trade log helped me a lot. I mean a LOT. I could go back and review trades and it became clear to me that I was occasionally taking trades that, objectively speaking, were not optimal; that is, they did not meet my criteria for entry. I fell victim to a bunch of newb errors, including but not limited to revenge trading, selling what showed me a profit and keeping what showed me a loss, and averaging down for the wrong reasons. I think the toughest thing for me to get over was the fear of letting winners run, the fear of losing the profit I had already made. The other ironic thing was that although I had a decent sized account, I was not using large enough stops because I was thinking about the actual value of the money I might lose if my stops were hit, i.e. of I just happened to have three losers in a row. So I started very well capitalized for a beginner, and had the ability to use stops commensurate with the vol I was seeing, but it caused this problem of thinking about the actual loss size. I agree with gnome - saying 'It is about fear of being wrong' doesn't resonate with me. It was about the money for me.
OK, here is an update since my last post: I planned a trade, a simple bull call spread. After price retested the lows and broke up I went long according to my predefined rules. Ever since the spread has gone ITM and will close the position either when maximum profits (expiration) come or if the trade breaks even. I considered building up on the position and would have been profitable but I use this trade as a test of my psychology so I will pass. Thankfully, I concentrated a lot more on my exits this time. I caught myself almost doing an impulse trade the other day but I managed to recoup my cool and stay out. Thanks to all of your kind remarks every time before I trade I have a talk with my inner self and try to understand how I feel at that moment and how these feelings were translated as trading results in the past. Then it all makes sense, it is incredible how accurate these inner feelings are: only by correlating them to what happened before did I manage to see what myself was telling me all along and I was simply not listening. My grateful thanks again for all the help. I will keep you posted on further progress and I hope some other people will find this thread useful for their own trading psychology (especially the newbies like me). kindest regards, George