Are you tired of leaving money on the table due to the fear of losing?
As a trader, it’s common to experience the hurdle of being too afraid to pull the trigger or hold your position, even when the setup is screaming “winner!”
I field questions from students all the time about this particular problem. And I get it. We’ve all been there…
You see the pattern forming, but something stops you from finding the conviction to put your money where your mind is…
But you must work your hardest to avoid this. Trading scared is a surefire way to set yourself up for failure.
The best traders are fearless in the face of a great setup — they trust their gut and stick to their game plans no matter what the market throws at them.
Take Jack Kellogg, for example. During the pandemic bull market of 2020-2021, Jack was fearless when other traders were terrified. He pushed his edge harder than anyone and profited a staggering $12.5 million in the process.
Jack will be one of the special guest speakers at this weekend’s two-day interactive stock trading conference — Tim Sykes’ $100K Summer. Grab your free ticket now.
But now, it’s time to fix your trading mindset and overcome the fear of losing.
As Frank Herbert wrote in Dune, “Fear is the mind-killer.”
With that in mind, keep reading and I’ll show you a few steps you can take toward becoming a fearless trader.
Go Over The “5-Item Checklist” Before Every Trade
A lot of trader fear comes down to a lack of planning…
People tend to enter setups without knowing their exact game plan for every possible scenario, causing them to scramble when the market throws a curve ball at them.
But if you form an airtight plan first, you should have nothing to fear.
I’ve narrowed this down to a five-item checklist to go over before entering any trades:
- Trading Checklist Item #1: Is It in a Hot Sector?
- Trading Checklist Item #2: Does It Have Unusually High Volume?
- Trading Checklist Item #3: Is It a Low-Float Stock?
- Trading Checklist Item #4: Does It Have News?
- Trading Checklist Item #5: Has It Run Before?
Filtering potential trades through this checklist doesn’t take long. But it could make a huge difference in your trading — and state of mind.
If a potential trade doesn’t check these boxes, it’s off the list. That simple.
Additionally, you need to know:
- How much money will you lose if the share price hits your stop loss?
- Your plan for profit-taking (will you sell at a specific level, 3:1 risk/reward, or scale out?)
If you answer all of these questions before every trade, you should have nothing to fear.
Size Your Positions Carefully
One of the easiest ways to get more comfortable entering trades is to lower the size of your positions.
If you find yourself fearful of pulling the trigger … you may be risking too much on each trade.
On the one hand, if you oversize your entries, it can be tough to hold the trade through wild volatility.
On the other hand, if you size your trades to perfectly match your risk tolerance … you’ll never be afraid to pull the trigger on a perfect setup.
Don’t go for grand slams or home runs. Hit single after single. Find consistency.
Once you’ve strung dozens of winning trades together, only then should you consider increasing your position sizes.
Focus on the Process, Not the Outcome
No one wants to lose money, especially newbie traders with small accounts…
That said, if you’re too focused on your PnL, you’ll likely miss important parts of the process of learning to trade.
Even more importantly, worrying too much about your performance is the root cause of trader fear.
If you shift your goals from performance-based to knowledge-based, you’ll be a much happier trader.
By simply gaining all of that knowledge, your performance will likely improve.
Grow your knowledge account, and then your brokerage account.
By doing so, you can work toward your trading goals without letting the fear of losing hold your mindset hostage.
Take the first step towards becoming a successful intraday trader and join us in the Daily Income Trader System today.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade