Getting IN: Dealing with Fear

How to mitigate fear of trading by desensitizing your to losses.

The bad feeling of getting stopped out feels 2x emotionally than the good feeling created from a good trade. How to psychologically 'stay' in the game?

Win twice as much as one loss. What do you mean? Shoot for RRR of at least 1:2 or develop your skills so that you have a 75% winning trade ratio (with proper money management of course). Tour trades need to offer a 1:2 psychological risk reward to keep your mental game balance.

Closing a winning trade brings a sense of relief rather than a joyous celebration. I remember my first four digit day...I thought I would be extremely excited. It was joyous for about 2 minutes after closing the position...that was it? I guess I need to shoot for a 5 digit day next!

Pull the trigger! This is tricky. It requires a few entries to build or observance that the strategy does indeed work.

Beginner: Use the smallest position possible (in my case 1 mini-lot...even better with micro-lots). Getting stopped out (20pips = $20) will still hurt because it's still a nice lunch. But the information gained will build the much needed 'faith' in the strategy.

Advance: Detachment. My suggestion is to calculate how much you are going to to risk today...and say to yourself "I have done my back testing, research, and seen this strategy perform with an EDGE on this pair. In the LONG run I will be profitable. Today I am going to throw X dollars, %, Pips, etc into the market with no expectation of the result."

We tend to go in with this mentality: "I have seen my mentor's trade this strategy with decent results. There have been times where they have been stopped out. Not sure if it's going to happen this time. Not sure if this strategy is going to be profitable because I haven't been profitable. When I enter this trade I with X% risk I expect to have a winning trade!"

With the detachment mentality...there is no expectation on profits after the trade has been set. When your trade closes at breaks even, you are NOT disappointed because you came out ahead in experience. Winners are a treat when managed properly. And Losers...you have already given your money to the market both financially...but this time mentally. Losing is to trading what pain is to life: without either, it would be a bland existence. Visualizing pain in term of ultimate profits will help you move forward.

Keep trading. Build your edge.

Series: Getting IN

Forex tuition - Food for thought NCSU Undergraduate In-State tuition is $2.8k+ (not including typical fees) per semester. Most people who trade are college educated...they have invested 4+ years and a minimum of $22.4k (unless they are on scholarship) to their education. Get a job. Pay off college loans.

I bring this up because most people who start trading do NOT take the same time and energy before throwing considerable monies into the market. This struck me because I am in my last year as senior and I have put time into a major I am working hard NOT to get into. Trading is my calling and the minute I can put ALL my time into studying and trading I can foresee my expertise increase exponentially. If you are serious about trading (options, forex, equities, etc.) invest the time and energy the same way you did for your degree. Thoughts?

My One word for 2010

Every year people around the world makes new year's resolution but it's hard to keep tabs on it after the first month. Instead of remembering a list it's much easier to remember ONE word to sum up your goals and feelings you want to project into 2010.

For 2010 it's 'Lifestyle'

By the end of 2010 I will be done with the College life. It'll be a shake down for most of my peers that enjoyed their sleeping in, classes skipping, girl chasing, and hanging out lifestyle. It doesn't help that our economy is not aiding mediocre students get jobs.

My college lifestyle will be shaken up. It's part of the reason I have invested a lot of time in forex education...to create a new and better lifestyle after what is suppose to be the best times of my life. ha.

To be true: My New Year's 5 F's are as follow:

Faith - Finish reading the Bible...I started the One Year Bible on August 1st. Almost half way through the book that has shaped the world in many ways. It's one of my most exciting goals this year!

Family - When I think about my family...make no hesitation in giving them a phone call...even if it's for a few minutes.

Friends - Build and shape quality/high caliber relationships with new and old friends. It's becoming difficult to hang out with friends after they depart school and start their new and exciting life

Fitness - Lean out to 185 lbs or get 4 pack...which ever comes first.

Finance (or forex haha):

• Raise $100k in mini-investments for my currency fund.
• Continue trading and shoot for 3.5% for month it comes out to be 51% annual return by the end of the year.
• Attempt to remove/desensitized fear and loss from trading...I am in the 5% got to have the mindset of a successful trader.
• Find niche to fill in forex blog and make more quality posts more often.
• Develop Forex Nutshell...my future blog/site.
• Place in the IBFX mini Challenge

Cheers and Happy New Year!!!

-2010 is going to be EPIC