Recently, I got myself involved in real trading. But then, something strange happened.
It was all new and different world. I wasn’t able to execute my strategy, to think rationally…sometimes I’d just look at my closed positions and ask myself:“Why did I even open that position?” That’s something that I didn’t experience on demo. At least in recent time.
Example: After studying daily chart of CAD/JPY on Sunday, I’ve seen excellent trading opportunity. Everything that I saw on that chart was telling me that CAD/JPY will go down. Market had obvious bearish bias. And it happened.
But what I did? I did following, opened short position on CAD/JPY, right after market opening. I took about 45 pips on that trade. But not on real account. It was demo.
Now, why I didn’t open that same position on real account? I don’t know. I was scared. My logical thinking was suppressed by emotions and fear of loss.
Now question, did anyone ever feel the same? How did you conquer your emotions, when at first look, they seem uncontrollable to me?
And can it be possible that psychology is the greatest barrier to success? Because I was able to make great profits on demo, and I was unable to do the same on real.
There gotta be some explanation…
“A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.”
-Mark Twain.
When you have a trading plan and a system that works for you that you follow religiously, these should avoid your emotions (fear and greed). Practice your good habit as long as you’d like until your confidence is back on track and trust of yourself and your systems.
I am sure you have heard these a thousand times that “practice makes perfect”. Because we are a human nature of ” getting a habit” (hopefully a good one), I would say[B][U] “ Practice makes permanent”[/U][/B].
I’d suggest you quit if you can’t handle the emotional side of trading…your present plight is the reason why i didn’t demo trade for too long, cause i know right from day one that i will learn faster when i go live.
I went live last month and by the end of the month i had 5% draw down but guess what?? i’m up 1% this month now, i have cancelled my draw down and I’m in the money as i speak (thanks to Mario’s speech few days ago and another thanks to todays FOMC report)
my point is if you can’t pull the trigger on a live account then you might wanna reconsider trading as a career…The secret is to start very small, you can even start with $100 and trade micro lots (0.01)
Forward test your strategy for at least (!!) a month on a DEMO account.
Only then start trading on a real account. I use the following and am pretty much neve scared to enter a trade if my risk profile is ok.
Your risk profile depends on various factors (win rate, etc.), but the goal is to minimize the chance of you blowing up your account.
Take the maximum loss you had either in your back test or forward test. Then figure out how much money that is and subtract it from your real money balance you plan on having. Does it look scary? Would that bother you? Would it affect you so much your following trades would suffer because it would psychologically stress you out? What if you had 5 such losses in a row? What about 10?
If the answer is yes…well…you’re using too much leverage and are trading too many lots. Decrease your lot size!
I trade the H1 charts and do the following to minimize losses (and my win rate is decent at 74%, which helps):
Initial stop loss of 15 pips.
My stop loss is set to break even once I’m 15pips in profit.
Having “safety nets” like that further helps to calm you down during trading. NOTHING beats back and forward testing your strategy on a demo account though! Don’t be lazy, all that work pays off
I’m by no means an expert but what I can say is that what you are feeling is natural. The only way to get round your emotions is:
Firstly, master your strategy or plan obsessively so you have confidence in it. Make sure it has an edge which is a fancy term for having a high probability
Look at every trade as “how much am I willing to lose if my plan or strategy doesn’t work”. Set you TP and SL accordingly
only risk what you can afford so when you lose it (because you will), you won’t care. Remember … no emotions.
Start off with only 1 trade a week on live for a few months, journal everything including your emotions. This will train you to be patient and not jump into every trade. Trade the other trades in the week on demo.
Don’t try to predict what the market will do, have a plan ie if price reaches this support, I’ll look to do this. If you are scared to take the trade, then you are either risking too much or don’t believe in yourself or your strategy
With utmost respect sir, after 9 months of practicing on demo, trying different methods, and making good profits…I wouldn’t say that I still “don’t know to trade”.
If I knew that transition from demo was that hard, I would start live trading sooner.
And no, I’m not going to blame broker or my system. Only one to blame is myself.
All the best.
“A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.”
-Mark Twain.
