Why do some traders have such a hard time entering live trades? To break this article up and make it easier to digest I will be publishing it in two parts. The first part of this article will discuss the issues that prevent a trader from actually pulling the trigger and entering live trades. Whilst, the second part will go through the mechanisms we can put in place to prevent any hesitations when a trade setup presents itself.
Hopefully, by the end of this article, struggling traders will have learnt how to pull the trigger on trades without any hesitation and to conquer their inner fears. Whilst, also knowing exactly the reasons why they were hindered previously and how to keep the demons at bay.
Making the leap into live trading
Let’s start at the beginning, so you’ve been very sensible and taken all the right steps to get your trading career off to the best start. Studied as much as you can about the key areas required to trade the Forex markets correctly. Gained valuable attributes like, patience, discipline, trading rules and where to look for trades to form. Been cautious enough to wisely open a demo account to practice your trading and master your setups. From the demo account you have proof of a consistent, profitable technique, with profits being made consistently for three months.
Great, you’ve made all the right choices so far!
So what next? – live trading!!
When the time has come, after putting in all that hard work, you have to begin trading with actual money, with a live account. At this point some overzealous traders may well think that if they have proved themselves demo trading then live trading is a cinch and maybe even consider the next step is to sit back, watch the money roll in and open the latest Aston Martin brochure and start choosing which colour your DBS will look best in.
Well, unfortunately you still have a long way to go before you are able to enjoy the high life. The conversion to live trading can be the downfall for even the most profitable demo traders out there. It may not seem like such a big step but rest assured going live needs a rock solid mind set and nerves of steel.
Why going live can prevent traders from entering trades?
Somehow the ease at which you were able to enter trades on a demo account can start to elude a trader when faced with placing live trades. If this sounds familiar, you are not alone. Most traders will experience a slight stutter when converting from demo to a live account. It is completely normal and will just need some adjustments and experience to conquer the change.
I wonder how many traders reading this have seen a setup, looked at it for a while and although it looks perfectly good, found themselves unable to enter the setup. Then later on you come back to the trade that you didn’t take and it’s moved exactly how you expected it would. The word annoying doesn’t really sum it up but please don’t think you are the only trader out there who this happens to. We all get these moments from time to time. There are lots of reasons why we sometimes find it hard to pull the trigger and I will now go through the main factors.
Fear, experiencing the sensation of fear in trading can have a devastating effect on any trader’s ability to pull the trigger. Whether it be the fear of being wrong or the fear of losing money, the results tend to always be negative. The main problem with fear is that if unchecked, it grows and grows, becoming an overwhelming emotion which takes over our trading. Fearing what might happen to a trade is pointless, all we need concern ourselves with is how to manage a trade and allowing the markets to do the rest. Accepting losing trades and understanding that trading is just down to taking high probability trades and using this knowledge to act as our edge, is all we can do.
Lack of confidence, being confident your trading technique is profitable on demo is one thing but proving it under pressure is another. If you have any doubts regarding an area of your trading, the markets will undoubtedly expose it to the fullest. The faintest sniff of indecision or lack of confidence in any particular setup you use, will cause questions to be raised as to whether or not the trade should be taken. If you don’t trust your trade setups, you lose your edge.
Over analysis, staring at a trade for a few minutes still unsure what to do, should send alarm bells ringing. A trade setup should be glaringly obvious and be visible as soon as you open the chart. If you need to try and find extra points to validate a setup, you may be tricking yourself into opening a trade that just isn’t there. The problem is when we over analyse setups, we tend to open up a can of worms and can find ourselves completely lost as to whether the trade is valid or not.
Bad run of trades, letting a run of bad trades affect the next trade decision is really tough, even the traders with the strongest of mind sets will have stored what has gone on in the past. Having a good routine and trading rules will help neutralise this but sometimes just good old fashioned balls of steel is the right approach.
Breaching the risk threshold, the amount a trader is comfortable with risking on each trade is their risk threshold and going beyond the risk threshold puts a trader vulnerable to mistakes. When a trader bypasses their risk threshold and starts risking too much on a trade, it can completely destroy a trader’s ability to allow a trade to play out properly. The risk threshold for a trader will always vary but is something a trader can improve and increase in relation to the growth of their trading account. If a trader is aware they are risking too much money on one trade, they will inevitably find it difficult to enter a trade without hesitation.
Wrong mind set, unfortunately life has a habit of throwing up lots of difficult challenges from time to time, which can affect our mind set. It may be a personal/family matter or due to illness but don’t be naïve and think these conflicts will not influence or affect our trading. Sometimes, even the common cold can reduce our trading effectiveness and this in turn affects our ability to pull the trigger.
Expectations set too high, no trade can be deemed a certainty, not by any trader. Being realistic and not taking trades too personally is very important. The ability of a trader to set realistic targets is also paramount.
Belief the markets are against you, a very common feeling that traders can experience is that the markets are in some way “out to get them”. It stands to reason, with so much talk of stop loss hunters, smaller Forex retail traders may well feel exposed or vulnerable. Like their trades are being picked off and stopped out by the big boys.
Over personalising trading, is a very big issue for lots of traders and feeling victimised when a trade fails exposes the traders who allow their trading to become way too personal. Trading is not personal, it’s just an elaborate game of probability. With the traders who have an edge gaining profits from the traders who have no edge.
What have we learnt?
To summarise, the inability of traders to pull the trigger and enter live trades is a very common and frustrating issue. Unfortunately, there is not just one simple fix to eradicate all the factors mentioned above, it’s a complex problem with our minds being the biggest obstacle.
The process of learning how to re program our mind set and control our emotions, including applying realistic expectations has a lot to do with gaining the right experience and focusing only on the information we need to make a consistent trade decision.
Probably, the strongest force which causes traders to hesitate is the “fear” factor.
The second part of this article will follow shortly and explain the ways a trader can resolve these complex issues, to start trading and entering trades without any hesitation what so ever.
Author
This article was written by Jeremy Poor, the head price action trader at dontlettheforexdriveyouupthewall.com. Learning to trade the Forex markets can be a daunting challenge, Jeremy helps traders to see the markets as they should be and where to look for the best trade setups to form. With lots of free Forex educational articles and videos designed to help traders find out more about price action trading, dontlettheforexdriveyouupthewall.com is a great place to start your Forex trading career.
