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Two Emotions

  
  Education
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Two emotions that plague the inexperienced trader are Anticipated Loss  and Buyers Remorse.

Does your trading life go something like this? You see a trade line up, and suddenly a cramp in your solar plexus appears as you anticipate a possible loss. You put this down to simple fear and make an effort to mentally overcome this internal barricade so as to enter the trade. Acting quickly so as not to miss out, you swiftly enter the position and your trading platform indicates that you are filled. Now you are gripped by the sensation of buyers remorse – too late to back out now… A small voice in the back of your subconscious says “what have I done?”

To your great delight and surprise, the trade soon goes in your favour, and for a while you feel a warm fuzzy glow and give yourself a little compliment, but soon the old feeling returns in the form of a hot flush. Anticipated loss is back again as you worry about the market turning against you and taking away the profit you now have. (more…)

Why do 90% get washed out?

  
  Education
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They say that 90% or more of new traders get washed out of the market in six months – why would that be? I just had an insight into my own current state and the implications of it long term if it were left as an unconscious process…

The fact is that learning to trade is hard; very hard – but on top of that, it is a zero feedback learning curve. You don’t get marked or a pat on the back for your efforts; the only feedback you get is:

You lose…
You lose…
You lose…

You think you are building up knowledge and skill in your conscious mind, but unbeknownst to you, in the dark invisible depths of your subconscious, you are slowly training yourself to HATE TRADING…

It is like constantly sticking your hand in the fire and going “Ouch! Ouch! Ouch!”

Your interest and passion for it is being quietly eroded. There eventually comes a day where you would rather do something else than trade that day; your instincts are telling you to avoid the pain.

It eventually becomes a DRAG…

Attracted by more pleasurable pursuits you realize one day that you haven’t traded for a week or two, but the very thought of it gives you a pain in the solar plexus… You brush the whole thing aside as an old hobby that was a large expensive waste of time.

You’ve been washed out. You are a statistic, but by now you couldn’t care less!

Two Emotions

  
  Education
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Two emotions that plague the inexperienced trader are Anticipated Loss and Buyers Remorse.

Does your trading life go something like this? You see a trade line up, and suddenly a cramp in your solar plexus appears as you anticipate a possible loss. You put this down to simple fear and make an effort to mentally overcome this internal barricade so as to enter the trade. Acting quickly so as not to miss out, you swiftly enter the position and your trading platform indicates that you are filled. Now you are gripped by the sensation of buyers remorse – too late to back out now… A small voice in the back of your subconscious says “what have I done?”

To your great delight and surprise, the trade soon goes in your favour, and for a while you feel a warm fuzzy glow and give yourself a little compliment, but soon the old feeling returns in the form of a hot flush. Anticipated loss is back again as you worry about the market turning against you and taking away the profit you now have. You watch the current candle as it bobs up and down… You stare at it in a trance as the feeling of being gripped by a giant hand increases. You struggle for a moment against this sensation, but then it overcomes you and you exit the position. Price moves on without you, and you are filled with buyers remorse again! On and on it goes, slowly eating away at your confidence and sanity.

Here’s what it feels like once you overcome this hump :

Having been watching a dull market for several days from the sideline you suddenly see a trade shining out on your chart. You have an initial “ah ha!” sensation, but you let that go so as to think carefully and not do anything rash or impulsive. You decide to take the trade, and spend some time calculating the correct entry and stop position; you know your standard 1R risk value already. Having checked and double checked that everything is ok, you enter the orders into the market and fill out the necessaries in your trading log, including entry time, size, reason for entry etc… Then you switch off to go read your favourite novel or walk the dog.

The next day, you check the market to see that your order has been filled and the market has moved in your favour. You think “good…” and examine the chart for the correct new stop placement, and you adjust your order in the market. You switch off and go do something else.

3 more days of these quick adjustments follow, and your profit increases with each surge, but on the forth day you check to find that you have been stopped out during a sudden reversal for a profit of 2.6R… Nice trade. You fill out the rest of the entry in your log, and then assume the attitude of sitting on the sidelines again for the next trade.

Now – the thing to bare in mind in the above examples as that both people might be TRADING THE SAME MOVE…

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