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First off, most of the time what we call "inner demons" is really just our amygdala & natural fear response (fight or flight), which activates each time money is on the line. It is nearly impossible to be fully rational when this happens.
So here are 5 tips to help counter this:
So here are 5 tips to help counter this:
1-Never fund ur account with money u're not ready to lose. And almost all new traders do this.
"oh my god I only have this $X,000 left over. I HAVE to grow this amount or im fucked."
Well u're fucked then, b/c it's impossible to trade with a clear head if u're afraid to lose
"oh my god I only have this $X,000 left over. I HAVE to grow this amount or im fucked."
Well u're fucked then, b/c it's impossible to trade with a clear head if u're afraid to lose
2-Similar to #1, Use a 1R (max loss or drawdown per trade) that u are COMFORTABLE losing if the trade goes south. if that amount is too big, ur amygdala WILL activate the moment u hit that unrealized loss, and u will freeze, cancel ur stops, and rationalize staying in the trade
3-Aim for a 3:1 (no less than 2:1) RR for each trade.
knowing that ur next loss will only erase 1/3rd of ur previous win makes it easy to respect risk.
It is also MUCH easier to eat a loss when you know that u can lose 3 times in a row and make it all back in just 1 trade.
knowing that ur next loss will only erase 1/3rd of ur previous win makes it easy to respect risk.
It is also MUCH easier to eat a loss when you know that u can lose 3 times in a row and make it all back in just 1 trade.
4- Expect EVERY trade u take to fail.
This will stop u from getting cocky or "freezing" mid-loss.
People only "Freeze" when the unexpected happens. They go into the trade so overconfident that when it backfires, they have a hard time accepting it. So ALWAYS PLAN FOR THE WORST.
This will stop u from getting cocky or "freezing" mid-loss.
People only "Freeze" when the unexpected happens. They go into the trade so overconfident that when it backfires, they have a hard time accepting it. So ALWAYS PLAN FOR THE WORST.
5- Lastly, as counter intuitive as it sounds, FOCUS ON PERFORMANCE, not the money. If u go into trades thinking " I HAVE TO MAKE MONEY/ CLOSE GREEN", You will be emotional as FUARK!!
It's ok to close red if u performed well. but it is NOT ok to close green if u performed poorly.
It's ok to close red if u performed well. but it is NOT ok to close green if u performed poorly.
Alright hope this helps. Notice how I emphasize managing losses more than I emphasize wins. that's because profiting off a trade is the easy part. It is not the scarcity of wins that end a trader's career, it is the abundance of stupid, massive fucking losses.
#BearTipOfTheDay
#BearTipOfTheDay
