The Fear of Winning

To some, this might sound somewhat strange. Its scarier to be in a winning trade, than a losing one. When you start trading, you kind of normalise losing. If you place a trade and it goes against you straight away, you have this hope that it will reverse, and some of us will even stack trades increasing our risk and exposure to a losing situation…. What go goes up, must come down after all, right? Wrong! At least not in the time it takes to kill your account. Worse still, even it it does reverse, its HIGHLY likely that beginners will close of the position the minute the trade breaks even, thinking they just saved themselves from a big loss, only for the market it steam off in your expected direction. I have done this countless times and its quite annoying why my brain fucks with me like that. Even on demo accounts I do it, so its not like its because a ‘real’ money thing. Its just the thought of losing or being wrong. This is something I need to work on. With out sounding big headed, I feel once I can overcome this hurdle I’ll be on the road to long term success.

Many people underestimate the tricks your mind plays on you in trading. You can understand the rules, strategy, even take more winning ‘set-ups’ than losers, but still lose due to the fact you closed positions before trade realised the full take profit. Leaving you in a negative Risk Reward scenario overall.

Part of the problem is that the markets generally move quite slowly, most of the time. When back testing or simulating your strategy, you can enter the trade and skip forward very quickly until it concludes. In real life, you can see each tick, each bar and with every slight pip that goes against you your heart can race and make you question your entry. You have time to start double checking, seeing conflicting information and before you know it, all your confidence is gone. In trading, and most things in life, having confidence makes all the difference. This is something I’ve usually excelled at, and still do in most settings. I’m generally a very lucky person and know any hard times are just lessons to propel me forward. With my brain functioning normally, I know all this to be true, just like I know if stick to my rules and set ups ill be successful in the long term… so whhhyyyy in the fuck do I lose my cool so quickly? The truth is, I don’t really know. I’m a sales person by trade and in the early years had to do a lot of cold calling. At the beginning it was very nerve racking, not really knowing what to say, handle objections and often getting told to piss off (usually worse) and deal with rejection 97/100 calls. Yet, after a short while, I was cool as a cucumber, the rejections didn’t bother me and I knew if I just carried on doing what I was doing, the sales would come. I hadn’t really though about that to much until just this moment, and perhaps I just need to keep putting myself in the uncomfortable situation, until it becomes comfortable. Just like with the sales, understand it’s a numbers game and if I stick my entry rules and plan, then over the long term success will come. Still, it doesn’t stop the adrenaline.

Turns out this way of thinking is perfectly natural and ‘normal’ human response. It might also be why 90% of traders lose money. We are wired to fear loss, even if its an unrealised loss. I think that’s something we need to remember, if you haven’t realised the gain, you never had it. Its like if your house goes up in value, until you sell it, you haven’t realised a gain, so if prices come back down 10%, you haven’t lost anything. Also if your house drops by 10%, you haven’t lost anything, until you sell it. Loss aversion plays a big role in trading. Ultimately, being aware of it and understanding that your mind is just doing what it was designed to do, meaning there is nothing wrong with you, and its just something that will settle in time, is the best way to help with it

There are several ways to help overcome this obstacle:

• Set Clear Trading Rules and Stick to Them

• Practice Risk Management

• Focus on Long-Term Goals

• Use Stop-Loss Orders

• Keep a Trading Journal

• Practice Mindfulness and Emotional Regulation

All this is easier said than done! I think one of the best ways to stay on track is to have a trading buddy, or someone to help keep you accountable.

 Would also say that writing all this out has helped a lot, so maybe doing a blog or just venting in some way that offers reflection could be all that’s needed.

Tomorrow is a new day and will do my upmost to stick to the plan and stay in trades at least until they go 1:1.