One of the first things I tell my new members is that trading is primarily an intellectual exercise and all the oscillators and indicators you can accumulate will not necessarily make you a better trader. In short, how well you trade is directly related to how well you can think like centralex a trader and not a layman fresh off the street. That being said, some of your best trade setups will occasionally end up producing negative results and this can be very discouraging to new e- mini traders.
Okay, I think we all know that you, as an e-mini trader, are going to lose some trades regardless of the merits of your setup. There is no trade that has 100% probability of success and losing trades is simply part of the process of learning to trade. I lose plenty of trades and so do all professional traders. The real mark of a truly accomplished trader is how he or she handles and unexpected losing trade. My advice is to look at each trade individually and pay no mind to the previous trade, whether it was a winner or loser.
What if you lose 2 or 3 great set up trades in succession?
Well, it is certainly not out of the realm of possibility that you could lose several correctly placed, high probability trades at some point in your trading career. To be sure, probability dictates that you will lose several very high probability trades in succession; taking a trade that you consistently win with and watching it fail can be confusing and disheartening to most individuals and they develop a “bunker” mentality. Quite simply, they lose their confidence in their “go to” trades and become very conservative and hesitant to trade with authority.
As a new trader, you typically trade with your mentor for several days and hit a good number of winning trades. I like to follow members of my program for several days and make sure they are taking the trades that are likely to be profitable for them. But eventually every trader wants to pick his or her own trades and develop a sense of individuality in trading. It seems to me that the tendency to “go it alone” happens at about two months of live trading. Then, they hit execute 2 or 3 high probability setups that go south on them in a big way. They lose confidence. They lose their edge. You have to have some sort of edge to successful. My edge has always been not restricting myself to lagging indicators and trading in real-time. I guess I would mention that any trader has to have a certain level of resiliency, but that’s for another article.
Fear based trading can be one of the most debilitating conditions a new trader can encounter. They seem to lose the ability to “pull the trigger” and off and end up entering trades late and taking profits far earlier than normal. In short, one of the surest signs of fear based trading is taking profits very early in a trade and not letting it run.
In my experience, traders tend to buckle down and outgrow this fear as they develop confidence in probability and acceptance of a few losing trades along the way. But there is another group of traders who simply cannot stand losing and each losing trade drives another nail in their coffin of trading failure. My experience with this type of trader is they began a quest for the “trading holy Grail” and spend years and thousands of dollars trying to find that 100% guaranteed trading method. It doesn’t exist.
Overcoming fear based trading takes patience and the steady hand of an experienced mentor and is usually not an insurmountable obstacle in a new trader’s quest for success. On the other hand, those traders that simply cannot accept a losing trade find them self in a never-ending search for the next magic e-mini system or a miraculous indicator that shows all winning trades with 100% accuracy; good luck with that.