Stress and uncertainty and fear of failure in trading

I first got started in forex back in 2005 and in the past 10 years I feel I've seen it all - the many "sure thing" trading systems & EAs, the many forex videos we all get in our email urging us to send them our money for the next holy grail, the various internet trading articles, studying charts hour after hour, etc, etc. Despite all that, I'm still not a successful trader. I think a large part is because I haven't necessarily totally dedicated myself to succeeding in the business of trading. I feel I have just been dabbling in it off and on during these past 10 years instead of seriously treating it as a business. However, I feel forex is my best chance for success, because, quite honestly, I have very little chance of becoming a big success at anything else. I do think forex is my best hope.

I've came up with my own system (basically a trend following system) that I believe will be successful. Well, I guess I should say that I "logically" believe it will be successful. The problem I have is on an emotional and psychological level as it pertains to trading. It is a feeling of uncertainty and fear of failure. Ironically, as I feel I am closer than I've ever been to having a winning trading system, lately I've been having the feeling of stress and uncertainty in relation to the idea of whether I can be successful in trading. And I think it has been affecting my trading in a negative way in that it causes me to have a negative / defeatist attitude from the start and often times keeps me from pulling the trigger to enter a trade and following through with my trading plan. But I've been thinking about my situation recently and this thought came to me: Isn't the feeling of stress and uncertainty the same situation with any business? Meaning, no matter what business one has, there is always uncertainty - especially at the beginnings of the business - that the business wont be successful.

There is always stress and uncertainty of whether or not the business will work out at least until it gets established and the business proves it is successful. Thus, whether it is the business of forex trading or having a standard "brick and mortar business", there will always be uncertainty whether or not the business we choose to get involved with will be successful. So, regardless of the business field we choose, there are no certainties or guarantees of it working out. Thus if I really want to have my own business to support myself with, then I feel at least in one sense that forex trading is just like any other business in that it has no guarantees of success.

I know a lot of people will think it is silly to compare forex trading to a standard business because of the idea that "95% of traders fail" but I personally don't think it is that high. In fact, if you look at the stats of percentage of winning traders at the various brokers, you will see it is not "95%" of people losing in trading. And whatever the official percentage of losing traders actually is, I think EVEN THAT stat is misleading. I believe of those that do fail, a lot of those are not totally serious and dedicated to becoming a successful trader and do not want to put in the high number of hours and work that is required to be successful in the business of trading. I believe many people of whom get involved in trading is closer to the "get rich quick mindset" than they are of the "put in many, many hours of trading and study" mindset. I think that is what accounts for a big chunk of the overall percentage of losing traders (whether it is actually 95% or some other figure). The business of being a forex trader may well have a high failure rate, but so do "regular" businesses. According to Bloomberg, 8 out of 10 entrepreneurs who start businesses fail within the first 18 months. I think the difference of success for most people is the desire, determination and dedication to be successful in whatever field they're in.

Logically I feel if I can get myself to ignore my fears and just follow my trading plan, then that will lead to a measure of success and that will lead to more confidence with my trading and ease my fears. But, ignoring my fears is obviously easier said than done. lol.

This field has more uncertainty than any other field out there. What do you expect, your playing with the big boys and no one wants to lose money. The person taking the other side of your trade is also an intelligent individual that is trying their hardest to make it in this field. Not everyone can make it, this is just the way that it is. Ofcourse your going to feel uncertainty, its part of the game that's why this field rewards you for emotional stress. If you understand the field, you will be compensated handsomely. The ones that don't understand will lose everything, and unfortunately much more. You live by the sword, you die by the sword. You know what your getting into.

Also I believe that you may have to work on yourself first. You shouldn't have these feeling so severe in your mind, they should be in the back but nothing this intense. Your mind has to be positive and only positive, if you feel your self thinking like this it means that you aren't busy. I personally believe that bad thoughts come when we aren't busy. Like Napoleon Hill said, “Whatever the mind can conceive and believe, it can achieve.”

I think the problem is because you didnt have enough sample trades, you should test your system throughly on micro-real acc first, it will boost your confidence.

I believe that it's necessary to master both methodology and psychology, and that neither is more important than the other, because any weakness in either guarantees failure overall. From what I read, it seems some folk believe that they can succeed simply through self-belief, optimism, and perseverance, and any failure should be attributed to their personal psychology, while overlooking everything else. I also believe that many folk don't understand the implications of 'randomness' and the way it operates in the markets, i.e. they believe that repeatedly applying a rigorous mathematical formula will lead to consistent profit. If that was so, I would expect that many more retail EAs would be profitable.

Discipline and consistency can only be the by-product of having conviction in a proven approach, and IMHO the reverse (attempting to derive an approach based around one's personal psychology) is putting the cart before the horse.

Hanover, have a good day.

Could you please suggest the way to determine the strenght/weakness (in order to pair currencies) other than (1) looking on the chart for obvious movement (2) following fundamental reasons, (3) looking for levels rejected by price. In other words some kind of measurement which can be coded.

I understand that fundamentals is the ultimate reason for any movement however i would preffer to use some kind of automatic method. I trade part-time, daily candles, put trades at midnight, check what happened yesterday on 1H TF.

Best, M.

--

well, i have just found your indis - thank you for sharing them

Topgun, in my opinion, if you want to trade really well you have to get above your feelings of fears and confidence too.

It is really a huge waste of energy and of brainpower, fearing a failure or hoping for a success, holy crap.
You must focus on the market, on the charts (is it overbought, oversold, going up, going down, is there momentum or not, is it in a support-resistance area, are there fundamental data coming out soon or not, etc.) and on the overall political-economic situation of two or more countries (as any currency pair have 2 currencies in it), and you have to do this constantly, it is not really a huge work to do but it is much better if you do it with a 100% focus and forget the various feelings of fear or hope/confidence in the meantime.

That shit is not real, it looks like it is real, but it is not.

What i'm trying to say, the feelings spectrum is really counterproductive and dangerous for your success, in one side of it there is the fear of failure, the uncertainty, the hopelesness, while on the other side of it there is the confidence, the feeling of being a successful trader, all the wonderful feelings of being the number one and the bliss and happiness associated with it.

Both of these sides (the bad emotions but also the good ones!) are dangerous and very bad for your trading success, this whole spectrum of emotions is just a byproduct of your mind, it work as a big filter between you and the markets, a distraction, a brain-power parasite (it sucks your thinking energy), the most important step you can do to finally have the success you deserve is just step out of this feelings and emotions crap.

Now, once you are free from the various emotions (just during trading), you are free to trade objectively and lucidly.

Good luck!

Interesting post TopGun. I like your avatar too.

You are on point when you compare trading to a standard business. You are buying and hoping to sell a product at a profit, just like every other business out there. Your advantage is that you have almost no overhead.

That said, to relieve stress and anxiety, you need to start with a small enough position size to know that you can take some hits. Quite a lot of hits. If you do it this way, emotions will not be a part of your trading. The losses you take will be the cost of doing business.

95% of traders fail, or so they say, because they quit before they get a handle on things. You have those blokes who trade in a lottery fashion, you have those girls who cannot stand the fact that they lost 25 trades in a row. All of these folks are not cut out for this business.

Are you??

I too have attempted to write profitable automated systems, for all of the obvious reasons. However, I've come to believe that markets behave too erratically to fit a completely mathematical algo. As you point out, things like visual abstracts, context, discretionary nuances, fundamentals, etc are obviously too esoteric to nail down in code.

However, there are members (hayseed, Custos, Craig, ....) who have apparently found a way of achieving profit through automation. Hence they are better qualified to offer guidance than me.

Solution of fear : hire someone handover your account to him and just give him signals to put trades ..change password of mt4 by himself so u will not be able to watch the equity ..
solution of uncertainty : make a robot for your trend trading system so it must will enter at all signals and u may will not miss good signals etc

Strong emotions, excitement, spirit of the hunt keeps you here in trading. Some people come to forex for earning, some - for emotions. If you'd like to become successful, rich trader, then you have to become cold and calm, like machine. Also you may always invest in profissional trader and have stable (if everything will go fine) profit

Here's my 2 cents. Forex trading is a business just like any other. Every business has a certain level of risk. Forex fits in a high risk business type category. Just like insurance. Insurance is not that different than forex trading. The insurance company develops a strategy based on statistics and probability that not all claims will be filed at the same time and the cumulative premiums, should more than cover the claims that are filed. Similarly, the idea in forex trading is that all loses will be small and the cumulative profits taken will outsize the said loses. In other words it is a big bet just like trading. The difference between trading and gambling is only two things. Probability and money management. That being said, you have to know the type of business you are getting into and have some type of aptitude to run it. You wouldn't compare forex trading to running a sandwich shop, just as you wouldn't compare running an insurance company to opening a gas station franchise. All businesses carry their own risk profile and you have to choose one that suits your personality. That being said, forex doesn't suit everyone's personality as every one has a different appetite for risk. Lastly, forex trading over longer term timeframes is much simpler than trying to trade intra day. Especially very low time frames such as 1M and 5M timeframes. IMHO, I think most people can learn to trade the daily chart at least profitably if they put in the necessary time and effort to learn how. Scalping and intraday trading is another story and have an even lower success rate. So to answer your question, I would just focus on the daily chart and construct a strategy around that time frame. To reduce the fear and uncertainty, use leverage you can go to sleep at night with, wide stops, and some sort of trend indicator and trade in that direction. Whether trend following or profit taking is employed, if you do these things at least, I think it will get you closer to your goal of being profitable.

Thanks everyone for the advice. As several of you suggested, I need to control my emotions while trading and not get too up or down... whether I have a win or a loss. I tend to focus in on every singular trade I make and I know that is not the best way to trade. I need to look at the big picture (a large series of trades) instead of getting too worked up because I happen to lose 2 or 3 in a row. This mindset is something I need to work on.

losing trade and emotion could lead us to a state where we loose all truth and certainty, but, based on my experience, I think there is truthes in trading and we need them to put probabilities on our side :

my evidences .. (I wrote this for myself also) :
- we must be aware of the statistical dimension of trading,
- series of loosing trades WILL OCCUR, we must be aware of that,
- we must size our system to be able to survive to these series,
- little account, like 150$, 250$ bring to more stress on each trade,
- chart patterns exist,
- market always do the same thing, but with some degrees of freedom,
- stop hunt exist.

on the methodology, I believe on the positive effect of the feedback loop, we must accept our losses and analyze them, by exemple, by displaying our trades on chart, and analyzing them on higher timeframe...

Finally we must have the will to make progress and we must believe in our capacity to progress, we must measure this progress...

we must be able to find the step in wich we are :

Step 1 - Unconscious Incompetence.
Step 2 - Conscious Incompetence
Step 3 - Conscious Competence
Step 4 - Unconscious Competence

There is a lot of trading WISDOM in FF, thank to the ancients...

If you have the fear to lose the deposit, it will be lost surely. All natural. If there is fear and concerns - then you are not really experienced trader and you don't trust yourself. There are many techniques how to deal with emotions in forex, how to prepare yourself to trade. And I would advise to get acquainted with terms such as "beginner effect", there is described in detail where does the initial "easy" success, which always ends. And remains either professional or regular losses.

Hi Nonor,

I use your dashboard MTF-RSI for everyday trading and thank you for giving this weapon to me to trade stress-free. I planned margin in such a way that I am using small contracts to downgrade the leverage from 20 times to 5 times (we can't choose leverage but we can plan contract value as per our comfort level) so that I have enough room in my account to face drawdown up to 15% and banking upon the tendency for the pairs to revert back. Some times it does happen. For me EURUSD and USDCHF are moving in opposite sides. If EURUSD is hitting resistance level then USDCHF is touching support level. If USDCHF support level is quite strong the reversal for both pairs will happen.

Armed with your indicator, I have spent some time to understand how currency pairs work and why market makers choose different hours and different market sessions to move the currencies. Currency trading does not give any dividend and the only way you can make money or lose it is from changes in the prices. Market Makers have to engage traders in all different markets for currency trading but the engagement is done in a random way that we are not able to detect which currency pairs are consolidating now or supplying strength or weakness to which pairs and at what time .

Our eye is not trained to detect such rapid movements by watching 28 pairs. Your indicator acts as our eye to detect the movement for position trading.

If it is possible to catch the timing pattern and the momentum is indicated then we can keep an eye on them.

Some kind of vertical time indicator superimposed on trend lines slopes of all 28 pairs will be very helpful to detect timing patterns on a daily basis. Just like London hours are active for major pairs. But we don't know much about this active trading pattern of cross currency pairs.

Unless you don't treat fx trading as a business activity, you will not take it seriously. If you do any business, do you wake up every morning counting your profits.
then with fx, when you wake up first you thing you want to do is take a look at currency chart. Why?

If robots are made by business people, fine. Jokers are making robots without any inkling of what fx trading business is.

imagine a food chain..... one species eats other species.
and there is a hunt in savana.... to make the story short :the lion didn't eat the whole flock.
the one who survive is not actually a winner.