It is funny to hear you say this as I have a very similar experience. When I first started trading futures, I had no fear and did very well for a while but my experience/methodology wasn't good enuf to survive the market when it changed so I took a sizable drawdown. Then the fear came, I reduced to 1-3 lot trading and developed all the habits of a fearful trader. Couldn't seem to get past it. One day I realized that my trading methodology was actually quite sound but I just wasn't managing my trades correct because of fear so I said F@%& THIS... it's do or die time I have to deal with this as I trade for a living so my life is depending upon conquering this problem. I will not survive as a 1 lot trader, I have sufficient capital to trade size, my trading plan is sound so just F@%&ing do it. It seemed that when I started trading size again it forced me to deal with the fear. Was really the point that I turned things around.
During the time period I mentioned before, about 2 1/2 years ago, I removed my P&L window from my continuous view. I have stated this comment before that IMO watching your P&L window during a trade is like having a crack addiction. You should be watching price action and managing your trade...not fixating on the P&L window distracted from what the market is doing. A periodic review of the P&L window after each trade completion or portional scale out is more appropriate IMO. Chris
In a similar manner, I found tracking my trade P&L, both in real time and historically, in terms of points instead of dollars to be helpful psychologically. For me, losing 20 points has a lot less sting than losing $1000 (when trading the ES). -- M
Overcoming "hope" in my trading has helped me tremendously. I no longer "hope" for a trade to work out. I trade what I see and if the tape/chart disagrees with me, then I'm out. On the flip side, "fear" has been getting in my way of making big money. I've found that since I no longer "hope" for my price targets, I "fear" and lock my profits quickly or take my losses faster than I should. I prefer having fear in my trading than hope, but both can be harmful. Once those two are managed properly, then one has just turned the corner.
You can have both hope and fear, but in the right situation. Jesse Livermore states that we should have hope in a winning trade and fear in a losing trade. That way you are able to let winners run and cut losses short. The obstacle is the human mind which unfortunately works the other way round.
"..it would be reaching an understanding of the nature of probability.." dbphoenix Well that is the zero sum dynamic (ie Dow). Do your research; set up your model. After that, well, 'Piece of cake, Gordon' as Bud Fox might say to Gordon Gekko.
Getting out of a trade if it does not behave as expected, since it will almost always do the exact opposite.
Since I am in over 20 positions at any one time I just focus on P/L only, I have a blotter that is sorted by P/L and this approach really helps identify losers and winners very quickly. The P/L does not lie it tells you exactly where you are.