Relatively often, I find myself in situations where beginning traders are telling me that they have done all the necessary work such as backtesting and profitable papertrading, but they still can’t find the courage to click “live”. Therefore I will try to summarize a few pieces of advice and tips in today’s article.
First of all, I would like to repeat that this advice is only for those who really underwent the necessary preparation work, i.e. they have done backtests to verify functionality of their system and have done papertrading for some time and were able to trade profitably for a couple of months (alternatively they have done only papertrading, i.e. without backtests, but in that case for a longer period of time and more precisely). Without these basic steps, the beginner doesn’t show a diligent and serious enough approach to trading and they absolutely shouldn’t click “live”, because they aren’t ready enough!
As long as the beginner fulfills the requirements above, then, based on my experience, there are three types of fear to “click”, which I will try to describe more closely.
Fear no.1: I am afraid to lose money
I think that in connection with trading, this is one of the most common and most natural types of fear. Nobody wants to lose money and, for the vast majority of beginners, the concept of occasional loss that is part of a long-term profitable trading, is difficult to take in. Up until now, we were used to getting some kind of reward for every activity – in trading, this type of thinking is failing and it is even getting worse because of the factor that after a few hours, days, or even months of activity the outcome can be loss. This is why the fear of loss of money is completely natural and not always wrong. This fear has its positive side, because it helps conscientious individuals and it is pushing them towards better preparation and to make an effort to not underestimate anything.
And thus, it is important to realize if this is the fear that is stopping us to “click”. If the answer is ‘yes’, then it is important to openly confess to yourself if possible loss per trade represents a considerable amount (i.e. amount that we aren’t willing to lose, because in our normal life it represents a lot of money) or if it is an amount that doesn’t mean anything significant and a factual loss of such amount won’t be a major problem.
If we are talking about the first option, i.e. situation when possible loss from trading is unbearably high and it represents a lot of money, the advice is rather simple: Either you are undercapitalized, or you risk per trade more than what we are willing to lose and bear. In such case it is necessary to increase the account or move to a cheaper market (with lower volatility), alternatively lower timeframe – to achieve decrease of our stop-loss to a level that won’t be as painful. Or alternatively to do both (i.e. slightly increase the account and through a change of market or timeframe decrease the risk per trade).
If it is the second option, then the fear of loss of money probably isn’t the real problem. Maybe you are just telling yourself that this is the main problem and that the fear of loss of money has the biggest influence on you – but it can be just a conscious belief, which is far from what is happening in your subconscious. Then the real cause can be one of the other types of fears.
Fear no.2: I am afraid to fail, I am afraid I am not good enough
This type of fear is more serious, because it is connected to subconscious models resulting from failures and lack of success in the past (which lead to lower self-confidence).
In the past if we suffered some substantial failure (even deeper, in our childhood) which could negatively influence us, or if we failed in something essential (effort to sustain a business, effort to make a significant change, etc.), our self-confidence can be considerably broken and our subconscious can slow us down from any other effort in order to protect us from another possible disappointment.
The advice here is substantially more difficult and if there is a deeper problem, it can be helpful to consult this with a professional psychologist who can help to find and eliminate such subconscious blocks and fears.
Personally, I have tried various types of meditation and other alternative ways for similar types of subconscious fears, but I respect that not everyone is willing to try them.
Yet I think that the best way is simply to click and live through the possible first loss in the market – to see that there is nothing horrible about it!
Broadly speaking, there are only two possibilities to “force” yourself into this first click.
The first one is to plan and prepare everything in advance. The better and more detailed planning of our first click, the higher the probability of its realization.
First of all, set yourself a target that for example next week (don’t postpone it too much) at a particular day and time you do that first click. For example, you can say that it will be on Wednesday, which is for some reason the calmest day for you and that it will be between 4 and 6pm, the period you have done your training on. But, ideally, you will do that first click in the first 30 minutes after the market opens and you definitely take the first trade according to plan as soon as it occurs.
Afterwards, for the rest of the week, visualize that “Wednesday” (or you can choose any other day) before you go to sleep. Imagine that the day has come, imagine in detail how you sit in front of the computer and you patiently wait for a trade according to plan and when it comes, you click on the mouse without any hesitation. Experience and envision your feelings (it doesn’t matter what feelings you have, don’t think about them too much), imagine both possible scenarios – that the first trade will be both loss and gain. The day before your set date, stop thinking about anything and when that day comes, just calmly do what you have visualised a few days ago. You will see that it isn’t as bad as it seemed – once this first experience is behind you, the other ones will surely be simpler and you will slowly get used to it!
The second option sounds a bit crazy, but it works as well. Now go to your computer (or at the earliest possible moment). Open the chart and click BUY or SELL (completely blindley, it is absolutely insignificant if you buy or sell), count calmly to 3 – and then close your position. And it is done. Your first trade is behind you; you clicked. Nothing terrible has happened, you are alive and healthy, you survived, and it wasn’t difficult at all! So why so much fuss about it? It was a piece of cake! Done; now you just have to repeat it based on your signals according to your trading plan, and you are where you want to be. There is no need to make it complicated.
Fear no.3: I am afraid of change
The last type of fear may sound a bit strange, but it also has its own reason and explanation.
The human brain doesn’t like change. The human brain prefers the past (which it likes to idealize), it declines to its deep-rooted stereotypes (this is why most of the people like to run on “autopilot”) and it refuses any kind of change. Just try to imagine how you would react if your boss arrives to your workplace tomorrow and exchanges people amongst departments and also changes their job descriptions from last week.
Trading is a change – a significant change. It can mean anything (a successful future isn’t guaranteed) and whatever outcome will be, it can sound terrifying. If we lose, it can be an unpleasant change to worse; if we succeed, at present we think that it will be great to start a new dream life – but in reality we can’t really imagine actual steps towards such a considerable life change, because in that current moment such a big change is rather dramatic for our brain! And so, our brain can subconsciously sabotage us to keep us as long as possible in our current comfort of apparent certainty that at least we know what tomorrow will bring. The brain loves its certainties (even the bad ones and horrible ones – for many people unsuccessful and depressing relationships are still better than none at all, and rubbish and hated jobs are still a better solution than to take a risk, leave a job and search for a new one) and subconsciously it can block many of our efforts to change. For example, it can constantly block our efforts to click “live”, which could be understood as a first step towards possible change.
So, what to do in such a case? Simply initiate in our life as many small changes as possible, which slightly “derail” our routine stereotypes and help us gain more self-confidence to click.
Choose a different, new route to work from tomorrow on.
Do something you have wanted to do for some time now, or do something crazy this weekend, like bungee jumping, go-carts, etc.
Try a meal you have never tried before and go to a restaurant you have never been to before.
Do something, anything, that changes your usual rhythm and stereotype for a couple of days or weeks. It is necessary to train your brain for changes, to teach it new flexibility. Then it should be considerably easier to click, because once your brain gets used to a repeated disruption of stereotypes, it will be much better prepared for a change – and so for your first click.