The markets are closed today, a legal holiday, so I will get right into where I left off yesterday.
Fear and “Day Trading” do not mix. The successful trader needs to find himself well before he sets out to trade the emini market, stock market or, forex markets. If you wait until you are trading against the professionals, you will wish you had not. The best way to get a handle on fear and trading, is to face it, head on. Write down, what it is that you are afraid of while trading. Lets give it a try.
Your list may include things like this; * I am afraid of getting stopped out * I am afraid of missing the big move * I am afraid of not hitting my daily goal * I am afraid of losing money * I am afraid of being wrong * I am afraid of being a failure before my friends * I am afraid of never making it as a successful day trader.
I could go on and I am sure you could find a bunch more. Those were a few off the top of my head. Write down, what your fears are as they relate to day trading and then you will be able to address each one of those and take concrete steps to overcome them.
I will break down the list above. I am afraid of getting stopped out. OK, first you need a plan, method or system of some kind to follow. I don’t recommend systems, because the markets are every changing and systems tend to fall in favor and out of favor, as many traders abandon them as soon as drawn downs hit, so a trading method is better. After you have that, learn it, get inside of it, take it apart and put it back together again to find out how best to make it work for you. When conditions call for a buy, place your order, set your stop and follow your method. Trade by exception as I have said, you should let the trades come to you. This is what you can do to overcome the fear of getting stopped out. Get educated, calculate your risk, see your reward and place the trade. You should have traded it successfully in practice sessions, which will give you confidence when you trade live. Let me say this, you should trade at least two weeks and make money each week. As a day trader, trading short-term swings, you should make money 8 or 9 days out of 10 before you trade live. If you can not do this, save your money. You are not ready. It takes time to get to this point and many are in too much of a hurry. Think about it. If you lose your trading capital, you die, just like blood to the body.
Fear; I am afraid of missing the big move. There will be others coming soon, don’t chase the markets and don’t be anxious. Let the conditions set up or forget it. Don’t feel you have to take a trade, there is no rule and if you have one like that, get rid of it. If price action says no, just wait. You need to know what it is that you are looking for. If you don’t, it will create fear and indecision. Don’t force the trade, it should come natural to you. If it doesn’t, do not trade it. You need to be relaxed, not tense with sweaty palms. If this is you, don’t trade, you are not ready. Practice taking trades where it seems natural to you. Recreate the environment that this is real, imagine, that you are trading real dollars and you are looking for a method setup. See yourself as it will be, when that time comes. This is like mirroring the environment before it actually happens. You will get a lot more out of these sessions like this. Also, do not take any trades for fun or just to see what will happen. That is useless behavior. Once you know how the trading platform works. respect it and take any practice trades as though they were real, period. When you book a few weeks of profit, you can ease into the market at the smallest contract size only and work up from there with market driven profits, even if you have a $25 or 50k account.
Fear; I am afraid of not hitting my daily goal. Don’t be afraid of something that has not happened yet, if you are not prepared, then you need to take that hesitation as a sign you need more time. Most traders believe they are ready well ahead of the actual fact. Don’t be one of them, keep your assets safe until you know what you are doing. If you go for the, “on the job training approach”, you will drain your account, for sure. The ratio of traders that are actually able to do this is very small, 5%. That is one in 20 traders. Some say that it is 10% but those are traders who may just be getting by with a slight profit, not exactly anything you could spend. Traders who make good money year after year are as small as, 1 in 20. What are you going to do different that puts you in that small minority. Be willing to work hard, practice and get to know how price action works. Reading the charts without indicators and understanding why they are making the moves they do. We need to have a respect for the markets, but not fear them. If you don’t respect it, it will strip you clean and you will only be left in confusion.
Fear; I am afraid of losing money. If that is the case, you are not ready, period. That kind of fear will make you do all kinds of strange things. You will get out, only to see the market rise, get frustrated and jump in at the top only to see the market fall before you eyes. You will then wait for what looks like a good counter trend trade and it will roll over on you continuing the downtrend, you will never get close to being successful if you have this emotion, for this reason. Don’t trade with scared money, get in a better financial position so that the loses do not affect you, free yourself from this and you will have a chance to unleash your new talent.
That has to it for now, I will continue tomorrow from here. I hope this is helping my readers, I welcome any feedback or questions.
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