A reader sent me this email recently. Before reading it, I would like to thank him for getting in touch because it takes courage to admit being in a difficult situation. It takes courage to ask for help.
“I am a trader with 22 years of experience. Like most traders, I lost a lot in the beginning and that fear of loss is still embedded in the brain although much has changed with my amount of accumulated knowledge that sits right next to the fear. Quitting trading was never an option for me , i don’t like be be beaten by things that are too complexed . it becomes a task that must be figured out and then mastered. The markets are so fascinating and much bigger than any chart that you put on a screen […] I have a good grasp of what will happen in the charts , i understand my risk / reward. Research and analysis seems to be in the high 70 to 85% range of ‘Getting it Right”…its a great feeling…except i seem to not take the trades that i plotted in great detail on my charts. […] I draw all my trades out on the charts… in great detail… I take some trades… not all mostly I watch… but I exit way to early and gain little bits her and there with now a positive curve with a few losses here and there…but it will take hundreds of years to get somewhere .. I get scared..[..] I exit the trades for small gains .. only to see what I drew on the charts
would have been awesome…if only I was in that trade and stayed to the target [..]all I know is my interpretation of the market
works and makes sense to me .. I do not sense the fear when I take trades…it is the silent action of it within that is always on the attack. I don’t take a lot of trades, I am not all over the place, the analysis is focused on one or two pairs with maybe 3 or 4 setups a week. I have an “internal me” looking for confirmation that what i see is correct . this is the hardest obstacle to get over .. and again i ask “WHY?” – D.B.
You’re Not Alone
The first thing to realize is that you’re not alone. There are more traders out there than will care to admit having this same issues. There are many people out there that can empathize and understand where you currently sit. I was also in your situation years ago. I know what it’s like to have a solid plan, that was researched and tested extensively, and yet be unable to execute it with peace of mind, and let it play out.
It seems like you are experiencing life, moment by moment, through a distorted lens. You’re experiencing the present, but interpreting it through the lens of the past. This works in both directions of course: a series of failures will have you interpreting your life experiences through a “blue” lens. Positives aren’t that positive…and negatives are ever so heavy and significant. On the other hand, a person that goes through a period of breakthroughs will have a “bright” lens, and will be tougher to discourage. The issue that could creep up is overconfidence of course…so both extremes are dangerous. But we need to believe that good times will come, we need to stay positive.
So what follows are the issues that stick out like a sore thumb, which are holding you back from expressing your true talent, and becoming the best you can possibly be – as a person, not just as a trader.
Fighting for Too Long
The first thing to say is that you have been stuck in a rut for too long. Just like people that fight anxiety for extended periods of time, the brain will start to function incorrectly. That’s why mental health professionals prescribe Xanax or similar minor tranquilizers: sometimes a person can overcome a panic attack or an anxiety attack with ease. Sometimes it takes a bit more time. But if there are repeated occurrances during the same day, or over a longer period of time, it becomes important to keep the brain healthy – as well as sleeping well at night, in order to have the strength to fight again.
When you say “failure is not an option” , you’re bringing a ton of pressure onto yourself and that creates a lot of stress. You also added some emotional charge to the whole trading thing by thinking “I don’t like to be beaten by complex games”. By not giving yourself an exit or a plan-B, you’re automatically creating a situation of panic in your mind & body. And if you don’t resolve the situation, or at least see progress, in a short amount of time, a vicious cycle is born and creates a brain that becomes predisposed to be in a constant state of fight-or-flight.
Chronic stress has the ability to flip a switch in stem cells that turns them into a type of cell that inhibits connections to the prefrontal cortex, which would improve learning and memory, but lays down durable scaffolding linked to anxiety, depression, and post-traumatic stress disorder.
You have been fighting for 22 years and your brain does not recognize the progress you have made, because of the chronic stress you put yourself through. You most likely made “trading” the center of your universe. Most likely, you forgot to live. You also had some issues with your ego, and didn’t seek quality help. I’d suggest taking a while to accept all this. If the only thing that’s important to you (trading) has brought anxiety, stress and lack of satisfaction, you actually might be better to not trade at all. Because each time you open the charts and get ready to click the mouse, 22 years of difficulties remain embedded in your body. That’s a lot to deal with.
You will need to make drastic changes going forward in your life. You need to experience deep joy. Usually it comes from doing things for others. Do things for others that make you happy because you really believe in what you’re doing. For example, writing this blog post gives me great joy because I’m attempting to help you, based on my own experience as a coach. I’m also confident that other people will find it useful. At the same time, I’m grateful for having been through the tough times and come out the other side stronger: I have experience to transmit to others. I’m grateful for having worked with other struggling traders, and through them have gained additional experience to help people.
What can you do, today, to help someone else? What would give you an intense sense of gratitude? Find it, do it. Then rinse & repeat. It will be the first step towards rebalancing your life.
Being Right vs. Making Money
You also say have ” i have a good grasp of what will happen” and ‘”Getting it Right”…its a great feeling”. This tells me your focus isn’t where it should be. Do we ever know what will happen? I think a lot of your anxiety and issues stem from the fact that you aren’t reasoning in terms of probabilities. You’re implicitly looking for certainty where there can be none.
All you can control is your analysis process that leads to the trading decision, and how you manage the trade. A successful trading strategy does not imply having a good grasp of what will happen. That’s impossible and it’s the wrong mindset. A successful trading strategy should allow you to measure the known odds of the situation, before entering the trade. That way, you have a positive expectation over time. But each single trade remains a coin-flip in essence.
Losing traders have this emotional necessity to be right. With everything you’ve been through, I understand why you want to feel good by being right. But it’s a false trail. You’re implicitly trying to cure your ego & your body by finding positive feelings in your capacity to predict something that is unpredictable in essence. You’re setting yourself up for constant frustration.
Let go of the need to be right. Remember that the key is to make money, not be right. Your analysis is worth zero, unless it allows you to make hay consistently. And right now, there’s a gap. So a couple of solutions might be:
- Hire someone to execute your analysis for you with a profit sharing agreement.
- Setup an analysis company because if your accuracy is truely in 70-80% range, you can compete with our very own Steve & Alan! And they have institutional clients!
Pressure Kills Performance
One of the main issues is that you never considered the possibility that trading wasn’t up your alley. I usually tell people to dedicate 1 year of their lives to trading. If they don’t get anywhere on their own, seek help immediately. It’s not worth wasting time & money on something that just isn’t working. You’ve been at it for 22 years…it’s like you’ve been holding onto a losing trade for all this time and only now is the trade starting to retrace and move back to breakeven.
The amount of pressure you’ve brought upon yourself has, without a doubt, inhibited your capacity to learn and evolve. Stress does funny things to us and one of the easiest to understand is that it inhibits growth over long periods of time. The faster you can find a way to take stress/pressure off your shoulders, the sooner you’ll find clarity of mind and you might even notice that the solution is staring you in the face!
I know it happened to me that way. Trading was never my plan A…it was always my plan B. At a certain point of my life, it became plan A and I had no plan B. That’s when things started going downhill. Finally, about 12 months into the journey, I got a day job and magically, my trading started to improve. Had I discovered anything new? Absolutely not. But I no longer had the pressure to perform, and I was mentally prepared to abandon trading and accept it was not for me.
So my suggestion is to remain open to the universe of possibilities the world has to offer, and regain a balance in your life. Trading is only a job (and it may not even be the right job for you, after 22 years without success). So what? There are plenty of other things to do. If you’re good with analysis, find a way to exploit that talent. If not, something else will come your way- but only if you keep your eyes open (and not constantly fixed on a screen). Otherwise you’ll miss the bus even if it passes right in front of you.
Confidence is a Trader’s Best Friend
The issues that have emerged are all mental – not at all technical. You admittedly found a solid way to confront the market and you are maintining some good practices:
- your view of the markets makes sense to you (which means you understand what you’re doing and why)
- you don’t take a lot of trades (so in some way you are filtering quality situations)
- you are not all over the place, the analysis is focused on one or two pairs
The suggestions in this article are meant to help you find a new balance in your life, and take the importance away from trading (which is paralyzing you) and putting the importance elsewhere. That’s the first step forwards. The second step requires working on your confidence levels.
Confidence is a trader’s best friend: without confidence, we cannot act. We cannot make decisions of any kind. We’re constantly looking for approval or for confirmation of our actions and we’ll never be in the driver seat of our own lives.
In trading, confidence is built through competence. If you have seen your analysis be proven correct, time & time again, then it’s just your fear of being wrong that is making you take the quick pips and not be able to hold the postion. So here are some practical suggestions:
- Do the analysis, execute the trade and then leave your screens and go workout or go visit a friend, etc. Detach yourself from the trade management process because that’s where the cookie crumbles currently.
- Start being mindful of your thoughts which are self-sabotaging you. Ask yourself: what is the worst thing that can happen? If it’s death, then your fear is justified. If it’s only losing money or being stopped out or being wrong, then you’re in the same position as a guy in a bar that doesn’t have the courage to ask a girl to dance because he’s afraid of being rejected. It’s all nonsense.
If all else fails, get help from a mental health professional or from a fellow trader that has been in your situation and has succeeded. Avoid talking to traders that are in your same situation now – it’ll be like throwing a pity party! You need to change your mental habits and mirror those of people that have succeeded.
In this blog post there are some suggestions from my own experience. It may not be enough, but it may lead you towards a new chapter in your life.
Good Luck!
by
About the Author
Justin is a Forex trader and Coach. He is co-owner of www.fxrenew.com, a provider of Forex signals from ex-bank and hedge fund traders (get a free trial), or get FREE access to the Advanced Forex Course for Smart Traders. If you like his writing you can subscribe to the newsletter for free.