Series: A Trader’s Diary on Fear
I must admit, I have a love/hate relationship with trading. When it goes in my favor, it’s the best thing since sliced bread. When it doesn’t, well let’s say the thoughts aren’t as kind. Those days when the challenge of trading seems to be more work than it’s worth, I have blamed the charts, the broker, the indicators, the market itself. But the unfortunate hard truth is it is that it’s about me. I’m the one who is executing the trades and I’m the one who stays in too long or gets out too early depending upon what I’m feeling at that moment.
Now there are some of you that may be thinking,” doesn’t he have a plan?” Absolutely! And I’ll tell you that I practiced my method for 4 months before deciding to commitment real money to it. I know that the method works. I’ve tested it out, ran it through its paces and I’m very comfortable with the results. But as they say, trading live is very different. But why is that?
Well, in the end, trading isn’t about what method we’re using. It’s about the thought process and what we’re feeling when we are making trading decisions. What I mean by feeling isn’t some new, Gestalt theory of trading but the actual chatter that might be going on in the back of our minds when we’re sitting in front of our computer screens. The things we say to ourselves knowing that no one else is listening in.
For example, my household has always been a two income family. When my wife was laid-off from her teaching position, the pressure to make good trading decisions was exaggerated. At the time, I didn’t realized what the unspoken pressure was doing to my trading. All I know is that the impulse to take the next trade was greatly influenced by the need to make the mortgage payment, pay tuition, and put food on the table.
What I discovered is that the pressure to make the next trade is based in fear. I’m afraid that I’ll lose the capital to trade, I’ll lose the respect of my family for not being a good provider, I’ll lose my earthly possessions, I’ll lose, I’ll lose, I’ll lose. You can lose your mind in this process.
And here’s the rub. Fear is individual and has thousands of manifestations. Fear doesn’t fit into a nice neat package. It doesn’t show up in the same fashion to all traders in the same manner. We can diagnose the symptoms of fear but there is no ‘fix’ for fear. Frankly, we don’t want to fix fear. We want it to show its ugly head and reveal itself. Fear is a warning sign of impending danger. Warning signs are good. They help keep us safe.
It would be nice if fear was as overt as the ominous sound track to the movie JAWS. All we need do is listen for the telltale sound “da dum”. “da dum”. “da dum”. Or police chief Brody at our side screaming, “GET OUT OF THE WATER!” That would make this trading thing go much smoother. But our warning system is what our gut, feelings, tingle at the back of our neck, pain in the small of the back, (insert your version here) is telling us at that moment. It’s built in; factory installed and has had millions of years to develop. Fear won’t be controlled, eliminated or ignored.
So what do we do? Stay tuned for the next installment.