Most traders don’t have problem reading the charts and finding good
trades when they finish our courses and tutorials. Howrver problem is not
findong good trades but being able to pull the triger on them. When i talk
to traders that have just beggin theirntrading career and are in many cases
frustrated, I find out they don’t have problem with finding good trades but
with executing it.
So let’s take a look what is the cause for capable traders to have such hard
time deciding to pull the trigger on a perfectly good trade.
THE MOST PROBABLE CAUSE FOR NOT TAKING THAT TRADE
The biggest reason isvthat tradersvdon’t have enough confidence in their
abilities, especially beginners think trading isvmuch hardervthan it really is.
So when they see an obvious trade setup they think it’s to easy to be true,
and they start questioning themselves.
Another reason is that for many traders change from demo to real trading,
can turn rhings around. When you trade with real money, you realize you
can easily lose it with one wrong trade. And that can really ruin your
trading mindset. When you were trading on your demo account you took
obvious trade with ease and confodence, and to aachieve that kond of
demo-trading mentality you just need to manage your risk to a dollar
mount you’re comfortable with potentially losing per trade.
The next reason is also known as the issue of »Murphy’s Law« which
basicaly means that anything that can go wrong will go wrong. Let’s take a
look at an example. There were some great trades you didn’t take and then
a similar trade shows up on the market on which you take a risk and you
trade it. Trade goes wrong, you lose money and your confidence falls
quickly. So you don’t take the next chance and it turns out to be a winner.
This can become a never ending cycle and you become frustrated and
eventually you start making bad trades, because you get so mad about all
the good trades you missed, and that kind of behavior leads to huge loss of
money. It could be really funny situation, if money wasn’t involved.
There is also something I call HINDSIGHT ADDICTION which affects one’s
confidence in executing the tradr. Many traders don’t even know that they
are addicted to their hindsight analysis. They are afraid to make a tradr
without the knowledge what happens next on the chart. And that’s why I
am not a fan of back-testing, but i prefer forward-testing or demo-trading
in real time, to find out the extent of your abilities before going live.
HOW TO STOP BEING AFRAID OF GOOD TRADES?…
Here is some help to train yourself out of these habits and to overcome
your mental demons.
First of all remember that to make money you musz take as many
examples of your trading edge as you can, and over time you can see if that
edge is profitable or not. This idea came from late-great Mark Douglas that
I explain more deeply in a recent article I wrote based on his teachings.
The idea is you should take trades you’re confident about and also the ones
you are only about 50% confident about. In the end, how confident you are
in a particular trade signal can be changed quickly, depending on many
variable elements, some of which even have nothing to do with the charts
(how your day went, the state of your relationship…)
You still should filter your trades, but not over-filter them and definitely
don’t convince yourself that there is no tradd worth trading. You need to
learn how to filter good trades from bad.
The main goal for you is to become confident about your trading edge and
to back yourself. Think like a sniper and don’t be afraid to pull the trigger.
SOME STEPS YOU CAN TAKE
1. If you are struggling to pull the trigger, try decreasing your lot size so
that at least you are in these positions and feeling the influence of
real money on the line. With these step even if you call the trade but
don’t trade it you won’t hate yourself.
2. Limit your screen time of looking at your charts to 15-30minutes a
day, because the less you look, the less you have time to think about
whether its right or wrong. Also focusing on the daily charts and end
of day trading, will help with your psychology of filtering.
3. You must read and feel the whole chart from left to right. Think
about it like reading a book. You need to read every page to know
what’s currently happening, and to make a plan for what could
happen next. The market is a book, being written as we speak, you
need to know what picture is being painted by the market.
In the GBPJPY daily chart example below, there wasn’t anything to
do through this giant period of data but once we got that pin we
could read what happened; consolidation, false-break, confirmation
(pin bar signal). We won’t go into detail here, but we saw a false-
break signal on the GBPJPY, those who were short got caught short,
and This pin was a signal and the short covering that followed, fueled
the run higher.
The signal itself is confirmation, but to get more confidence we need
to read what happened from right to left…The signal is the FLASHING
LIGHT, then go read what happened on the chart…
Price action analysis is not just about single bar signals, it’s
about reading the charts like a book, reading the »story« the
price action is telling you. I devoted an entire section of my
professional trading course to this concept, and for many
traders this was or will be the »aha« moment in their trading
career. A skill all traders should aspire to is glancing at a price
chart, being able to read it with ease and confidently anticipate