Hi everyone, I’ve been trading for just over a year and have learned many expensive lessons. I now have a super trading strategy which works every time when back tested and always when I am not on a trade. My main problem is fear of loss. Even though I know my stop is placed appropriately and my analysis is correct, I find myself panicking and taking the trade off either at a loss or snatching a small profit instead of my intended target because of fear of loosing my stake.
I know that I need to deal with my discipline and fear of loss and I wondered if anyone could give me some advice to help me. Thanks
Hello, you have been trading only for over a year, you should not expect the impossible. First of all, I have a bit more years under my belt trading, and I still consider myself a newbie. And I always will. So, keep an open mind, instead of defining your trading strategy as fool-proof. Then, fear of loss. Just take a step by step approach. In time, you will learn to understand the market, so you won’t treat everything as a threat, To get rid of this fear, it takes time. Just keep at it, and everything will get to its place. Anyway, to sum up, it’s ok to feel lost and panic a bit, especially if you do not have enough experience.
You have not mentioned your trading volume! I mean fear is related to amount of money that is going to face the risk of return! However, I think if you start with small amount and see that your strategy being successful, then in the next trade you should not have any fear and you should increase your trading volume slightly…
If you feel fear even with a small amount of money, then you need psychological treatment! I would suggest you to go out for a trip and expend some money to enjoy, this should make you brave…
Thanks for all advice. I only trade a pound per point and mainly on cable. I started off with a thousand pounds and i have won and lost many trades in oObviously there will be poor trades a thousand
[QUOTE=“Crabby;493879”]Thanks for all advice. I only trade a pound per point and mainly on cable. I started off with a thousand pounds and i have won and lost many trades in oObviously there will be poor trades a thousand[/QUOTE]
Sorry about that last post !
Start again. - Thanks for all advice. I only trade a pound per point and mainly on cable. I started off with a thousand pounds and i have won and lost many trades whilst learning and testing my system. Obviously I will encounter good and bad trades but unfortunately, I only have half my original money left and I think at this is where my fear comes from. I don’t want to lose the other half and not be able to trade. Silly I know, but I started off very confidently and the more I have learned, the more the market and indicators etc make sense (!!??) the more fearful of losing am becoming even when I know that my trade ought to be a good one. Only today I placed a long trade on cable at 15099 with my stop set 30 pips away, which was more than safe. For the first ten mins my trade was working, but then the price recoiled and dropped in anticipation of the German news (I presume) and I took my trade off at a loss of £18 (18 pips) as a knee jerk reaction. Of course the price then climbed to my target 151329 as I had thought it would. But I had of course lost by then and it is doing things like this that looses my capital ! I sincerely hope that by discussing it via this forum, and by discussing my bad trading habits, that I can learn to take control of myself and my emotions. I am very thankful for all comments received.
From your description of things, it also sounds like you’re over-trading. Do you use a set Stop and TP?
To stop myself from doing pretty much what you’re doing- I adopted a fire and forget system. Once my entry criteria is met, I place my trade and then I don’t look at it again until a specific time. I now trade on daily charts. So I do my best to not check trades any other time than about 5pm right after NY close when I do my analysis.
At first, you’ll be anxious as hell and wanting to check it. But you just need the discipline to force yourself not to open your client and let the market do what it’s going to do. If you can- downsize your trade sizes even more. I traded about a dime a pip while I was still really new and getting used to putting my money out there.
One thing to help you: you have to realize that the market almost always goes the other way before making a big move. This is big money getting the best price, and market makers taking everybody’s orders, adding their own to these, and then they sell\buy it back to the small guys as the price makes the big move, so anticipate the opposite first move.
Well cheers chaps, all this is really helpful to me. I always set a stop and mostly a target although I sometimes remove the target if the market looks strongly in my favour. And as discussed move my stop or cancel the trade if it starts to go against me. I only trade with the trend so it makes sense what you have said about the big money taking in the orders. This will help me a lot in future. I also think that watching the trade does add stress to my trading and I think I will try to set a trade and walk away. I sat and watched a trade a few days ago for 4 hours whilst £4 in profit - which I took, only for the price to rocket up 50 pips more another couple of hours after ! So I didn’t maximise in this one either ( I work from home so have this liberty). It all seems so simple when there is no trade on, its just this psychological bond we have with money which confuses the issue. Thanks again.
Fear of loss is like diabetes, it means it can be deadly but still you can have some delights if you can control yourselfe. In other words it never goes, it is alwyas there, the one who claims is not affraid of losses is a big liar. The difference between me and the losers is that for me is ok having loses and is ok being affarid of it. Nothing to be ashame of.
I think fear of loss is good thing,if it can make you give more security to your trading system…because you know…anything could happen in forex no matter how good your strategy is.
I hope you are reverse compounding. Your pip value should now be half a pound, otherwise the last 500 pounds of your 1k will go twice as fast as the first half did.
A lot of fear of loss comes from fear that this will be your only opportunity to make money. Don’t worry there are plenty of chances every day, even every session or every hour. A lot of people make mistakes in trading because they are chasing price thinking that they have missed the boat, or stay in a trade thinking that they can never make back the loss. There are many many opportunities every day to make your money.
But this guy trade only cable! People have so many choices really!!
Fear of loss comes when we are not confident regarding the trading and this is mainly because of lack of forex market related knowledge and thus the traders lose money and fear for losses.
Actually losing is not that bad if you experience small losses. If you reduce the losses to what you would be ok losing (because no one is ever happy losing) then its better for you.
Thanks for all the comments. Actually I now understand and feel that this fear of loss may stem from thinking/knowing I have analysed my set up correctly and indeed I have understood exactly what my set up is. Then the market turns and changes direction completely, for no apparent reason and this then changes all the indicators contrary to the original analysis ! Take this morning on cable for example. I decided to follow the cowabunga system - the 4 hour (and indeed the daily) show a downtrend. I looked for a set up in the 15 mins for a short trade, which came at 10.45. RSI under 50/stoch pointing down/macd negative. Took the trade and gained 25 points within 1/2 an hour - nice. I took profit. Then on the very next candle the price did an about turn and from 11.15am to 1.15pm (2 hours) the price climbed 99 points!! Against the trend ! Now I know that ‘that’s trading’ but it does make you scratch your head a little !
Do you mind sharing your trading strategy?
My strategy ! Well I think I must have tried everything. I have read about so many strategies and after incorporating many indicators and analysis tools I fear I fell into the trap of analysis paralysis ! I suppose now I follow the trend, 10 and 20 MA crossover and momentum. Some of my mistakes have been not setting my stop in a safe place. Ie; I only might risk 20 points when a safer place would have been say 23 pips, so I would get stopped out before the market moved in my favour. Another mistake is snatching only say 5 or 10 points instead of my intended target - result my losses were always bigger than my profits. This is therefore where my fear of loss came from, and I was right that discussing it on this forum has been very helpful. Some of the comments have been great. I also over traded, and tried to ‘guess’ what the market would do next instead of waiting for a correct set up. I also expected a trade every day. I then discovered the cowabunga system on this site and realised that this was more or less what I had worked out for myself. I have realised however, that the hour chart should also be taken into account. As I write, on cable - the 4 hour MA’s are crossed in an up direction and so did the 15 minute - briefly ! The price then fell over 20 points and is still falling ! When the hourly chart is taken into consideration, although open in an ‘up’ direction, the macd is red.
If you have any comments, or would share your strategy with me I would be obliged.
Thanks for the reply and for explaining your strategy. I am in to Forex for about two months only and have tried many strategies but no use. Then the experts here at babypips told me to complete the babypips school first and learn about price action. So I have started to learn now and if you ask me about my strategy or system than honestly I dont have any which is successful in the long run. Yesterday I found out a new MA crossover so you can try it if you want. Its the EMA5 and EMA10 crossover strategy and the rules are simple as for your 10 and 20 moving average. Just make sure to have the “Exponential” MA instead of “Simple” but please please note that I didnt try it and just examining it on the charts and I only told you about it because you asked in your post about my strategy. I hope we both find something good soon. Please if you come across something good please let me know and I will too. Thanks.
I think you are right, go through the baby pips school - it is very thorough and easy to understand. MA crossover is definitely the key and the hourly and 15 min charts the ones to watch - when both in same direction trade that direction. Lets both hope it is that simple. good luck.