Dear Mike,
Thank you for your insights in your 2 books.  Given me great insight into the mentalities of the top traders and that too, of the failing trader.  I’ve started learning to trade in the last year and admit that I am failing.  Had gone through my journal, done backtesting on “my edge” and meditating and deep breathing during trades.  Yet, I still have a huge, huge difficulty :  Psychology.  On the advice of Steven, I humbly write this email to you for advice.

About my trading journey:
I started my trading April 2015 following the trading system of a certain someone on internet.  1Min bar, candlesticks on BB and I’m good to go.  Frankly, I did well then.  3-5 mins a day, I was up $300-$500.  For 2 weeks.  Then things started falling apart when I traded on news of $AAPL and bought on the dips intraday.  No idea what I was doing, but I lost all my profits in a single day.  I then stopped and started reading up and testing.  For the next couple of months, I started testing my strategies on SIM, and when I’m on a roll, I’ll start doing something stupid again, totally deplete my account, and start doubting myself again.  But I continued to read, learn, talk to people.  But each time I had a run, I’ll go on to do something stupid like:

– not following stop-loss rules, extending my losses
– placing a stop, and not adhering to it and closing out before I get hit (and the original stop was never hit)
– placing a stop so close it is IMPOSSIBLE NOT to be stopped out (like $0.02 from entry price)
– closing a trade at breakeven (within 5 mins of placing the trade) without any confirmation of direction
– questioning myself over and over about an entry and either miss the trade totally, or I’ve just simply increased my risk-reward from 1-2 to 1-1.
– placing a LONG when I told myself it was a short because the Dow Jones was UP (stocks)

In short, I’ve done well DOUBTING EVERY TRADE I AM TO PLACE and MYSELF.  I Aced it.  I’ve gone back to simulation, and the same thing happens when I treat it like a real account. Yeah, I know, crap beginner.

I have FEAR. GREAT FEAR of making a wrong trade.  GREAT FEAR that I will lose the profits I have.  I had beaten myself up constantly during trade not because I took a trade and it didn’t go my way.  In fact, when that happens, I accept I was wrong and was at peace and seek to improve my judgment.  Rather, I beat myself up for the total doubt and fear in placing a trade when I think I see it or ruin the trade with so much fear that I close out with a small loss or at breakeven, even when the trade was in my favour. Things I have identified about myself:

1.  Extreme Fear of placing a wrong trade
2.  Extreme Fear of losing profits or the trade losing money
3.  Fighting my judgment of a trade by creating a mental resistance to that judgment
4.  FEAR

I’ve tried various ways to calm myself : Deep breathing, meditation before the trade, telling myself to trust my judgment, all to no avail.  When I see an opportunity, ALL 4 of the above stands right in front of me again. Every night.  I’ve come to a point where I show her what I think can happen, and she goes: “ So what? You still can’t trade!”

I’m sorry for the long email but hope that I can have some advice from you on overcoming them.

@mikebellafiore

Try placing automated stops immediately after you enter your positions.  Specifically try automated limit stops.

We had a similar issue with a trader at our firm.  He started having trouble hitting out of positions past his stop loss.  We suggested placing automated stops.  In fact we placed him on a demo to practice and successfully place automated stops until he could trade firm capital again.

Automated stops take you out of the equation.  When a price is hit you are automatically flattened.  No thinking.  No doubting.  No reconsidering.

Start there and see if that helps.

*no relevant positions