[Rande Howell]

A Time for Self Reflection:

Why do so many traders stay stuck in painful self limiting patterns rooted in fear and self doubt? It's not like your trading account will allow you to live in comfortable denial for long. Hold this question in your mind. The trader can see that what they are currently doing is not working. They acknowledge they need to do something about their fear-based trading - "they talk the talk" - but they, for some reason, can not push themselves into "walking the walk" of actually doing something about the power fear has over their trading. What's at work here?

I asked a very successful trader and teacher this question, and his reply was:

"Because the trader has not suffered enough pain." What!? I asked him to go on. "It takes tremendous pain for a trader to seek help and decide to change his ways. It was the same way for me. I'd been trading for 7 years before I finally cried out "UNCLE "- I've had enough and sought help for the psychology I was bringing to the trading room - I had blown out several large trading accounts, had declared personal bankruptcy, and was staring at my family starting to fall apart. That is what did it for me."

"Until then, I had way too much pride to admit that I was the problem - not something outside of me. It just wasn't me I was destroying - it was my family. That was rock bottom for me. I couldn't allow that - the pain was just too great. Finally, I knew I had to do something. Avoiding my pain wasn't worth it anymore. It was just a short term fix anyway. The fear kept coming back. In getting beneath the hood of my mind, I found the courage, plus the skills and tools, to face what I had spent my entire life avoiding. I know now that my fear of not measuring up created a bigger than life personna that tried to protect me from feeling my wrong-headed sense of unworthiness. "

"What's crazy is why it took me so long. I was really invested in "looking good". I much prefer who I am now than the trader I used to be. Losing is not longer a statement about me anymore. Anyone who trades professionally trains themselves to emotionally think in terms of having an edge in probabilies as they approach the uncertainty of a trade. Over time they are going to have more winners than losers and the winners will be much bigger than the losers. Calm, detached, confident, and humble. Losing or winning is no longer emotionaly charged. Confronting my fears allowed me to separate fear from uncertainty. This psychological freedom is what has allowed me to develop the trader I am today. But I had to experience pain beyond my threshold before I was willing to push through my denial and face the demons roaring like a hungry lion in my mind. Once did that, I wondered why it took me so long to do something so simple."

What can you learn from this trader's journey into financial success and personal growth? What I want you to notice about this trader's story is how long he stayed in the denial that continued his march into pain. I also want you to notice the enormous pain he shouldered. What was the cost of his not acting to master his fear? Hundreds of thousands of dollars for sure. But you, as a trader, know the cost of not confronting and mastering your fear is much greater that dollars alone. It is the loss of your potential as a human being that is really robbed. The tragic part is that it is not the market that robs you. It is nothing outside of you. It is your fear that robs you of the potential that trading offers. This is what keeps the unsuccessful trader locked in the comfort zone of his self limiting beliefs.

How do you or how have you broken out of this biologically-wired spell fear has entranced you? Where are you at in the evolution of the trader in you?

Rande Howell

[SIUYA]

Years ago when I first started trading I was chatting to a friend who was also trading - we worked on the option floor at the time. He was sort of big noting himself at the time about how he was the big player in the pit, how good his year had been, how if he left his firm they would suffer etc; etc;.( At the time I thought he had been stiffed on a bonus. )
This guy over the years never really made much money trading and is now a broker, partially as a result of this conversation.

Anyway... as you do on any floor, you pull these guys down and tell them to put their heads back in the box and get over themselves - all in good fun of course, but I said something that just came out without much thought, that has helped me in my own trading, and he still reminds me that it helped him put some perspective on his own trading/place in the markets even 15 yrs later.

what I said was along the lines of.....
"If you got hit by a bus at lunch today, by tomorrow you will have been replaced by your work as they need someone to manage the books risk, by next week you will be in the ground and we will be lamenting your loss, in 2 weeks time we will get over it and occasionally we will reminisce about remembering the time when you did something - most likely unrelated to the trading or the market, and all the while the market will not care who you are, what you did, think or say."

What both of us got out of it was that looking impressive, big noting yourself is relevant if you are selling, but when it comes to trading and managing risk its all about the doing and not the talking.....even if you are making good money. Why go through the pain of banging your head against the wall, either do what works, or do something else. (I also know quite a few people who have gone through this, so its not uncommon)

[Tradewinds]

The subject of fear is a foundational element of life. My opinion is, that we need to break fear down into it's positive and negative influences. If I burned my hand on a hot stove burner because I was not paying attention, and after that experience I start being more attentive around a hot stove in order to avoid burning myself again, that's a good thing. If my fear stops me from using a stove altogether, and my nutrition suffers because I won't go around a stove anymore, that's a bad thing. If, after I get burned, I don't face my fear, then I'll stop cooking. That's a bad thing. My argument is, that it depends upon what the fear is associated with. How did the brain cells get wired to interpret that fear?
Learning how to operate a stove is very simple. Learning how to make money trading is not easy. Don't misunderstand me, I'm not saying that trading can't be easy and simple. I'm saying that coming up with a winning trading strategy is not easy and simple. Those are two different things.
My point is, that once fear has settled in, and that fear becomes associated with something that you don't need to be fearful of anymore, then you have a problem. If I fear trading, and I don't have a winning strategy, then the fear is actually a good thing. The only time the fear of trading is not good, is AFTER you have a proven winning strategy. It's important to make that distinction. My fear of trading has kept me from loosing a lot of money trading. That's not necessarily bad.
Now that I have a winning strategy, I need to disassociate the fear from the trading.

[Rande Howell]

Originally Posted by Tradewinds »

My point is, that once fear has settled in, and that fear becomes associated with something that you don't need to be fearful of anymore, then you have a problem. If I fear trading, and I don't have a winning strategy, then the fear is actually a good thing. The only time the fear of trading is not good, is AFTER you have a proven winning strategy. It's important to make that distinction. My fear of trading has kept me from loosing a lot of money trading. That's not necessarily bad.
Now that I have a winning strategy, I need to disassociate the fear from the trading.

First, fear needs to be deconstructed from both worry and fear. Many traders have this pattern engrained in the way they see and interpret the world. Otherwise it is hard to learn to stop putting your hand on the hot stove. What I find most often is that the trader has a winning strategy as attested by simulated trading, but the capacity to learn from mistakes is compromised by the very thing your speak of here -- the need to decouple past learning based on fear and present learning based on risk management of uncertainty. Fortunately this can be done. Re-organizing the trading mind around discipline and impartiality in the face of uncertainty (rather than a form of fear of death) is the next step.

And you're right, if they don't have a winning strategy, I hope that fear does stop them from losing money needlessly.

Rande Howell

[Richie1977]

Good posts ...I agree with all of the above....especially determining good and bad fear...

[Rainmaker626]

It's one thing to say not to have fear or to not let fear cripple you, but it's another thing altogether on how you go about conquering that fear in order to trade..

I think that's where it gets tricky for a lot of people is what's causing this fear and if this fear is well founded or if there's no cause for having fear... Most people fear things, because they perceive a negative outcome from something.. It's actually akin to that old adage: "Once bitten, twice feared" So if a trader is losing trades because they fear or worry about pulling the trigger or coming out of a trade too soon, then they simply need to work on their methods or they simply need to trade with money they can afford to lose (the distinction is money they can afford to lose, not money they can lose)

If traders depend on their trading profits to maintain their livelihood, there's a greater chance that they wont be able to execute their trades having to bear the burden of not being able to provide for self and family if they are on the wrong side of a trade...

Whereas if you trade with money that you dont need to maintain your livelihood, there's a greater chance that you will have more flexibility in executing your trades as the burden of a bad trade wont weigh so heavily...


To me it's one thing to tell traders not to fear and another thing to discover what's causing their fear and to tackle that..

[ahimsa]

I beginning to think that it's true that the only thing that we must have fear it's the same fear.

[SIUYA]

anxiety is good, its natural.
The fear of not sticking to the plan should be what we are worried about.
We should not fear the market we should fear ourselves.