Nerves of steel – like Formula 1 racing.
Many new traders are unaware that they actually need nerves of steel. Some will argue that ‘nerves’ are not part of the equation – if one is truly in the so-called fearless state. But hang on – on the way to achieving that state, there will be ‘nerves’. It’s no good expert traders telling new traders to lose their nerves.
After a new trader gets his nerves of steel, then he actually realises there is ‘no nerves’. So to others the new trader who turns into an expert will appear to have ‘nerves of steel’. It’s a matter of perspective. Some don’t get it. Right think of the difference between a learner-driver and a Formula 1 driver.
You don’t get to race a car like this (in vid below) by studying the manual overnight and doing a few simulated runs in a VR environment!! An average driver would suffer a 100% loss!!
It’s accepted that new traders will:
- spend much time looking at charts as they move in real time.
- place many demo trades if they’ve shaken off Demophobia.
- eventually place some small trades on a live account and do some day trading.
- will lose much either on demos or on live trades.
- suffer the emotional strain and embarrassment that goes with losing.
- suffer emotional roller-coasters.
Losing is a very bad feeling. With some 60-80% of trades losing most of the time – it’s not the sort of thing you write to your granny about. She’ll think you’re mad or a loser – and explaining the mathematics of how winning overall is possible, ain’t gonna sink.
Let’s say you’re a new trader with a live account size of £5000. If you stick by the maximum 2% total risk rule (which isn’t actually a rule) – then your risk per one and only trade is £100 (on a spreadbetting platform). What happens when you’re in the red at £80, then at 90, then 98 – and you’re watching this unfold? I’m telling you, you’re gonna feel your ‘nerves’. If you don’t feel it then what about after a series of 4 or 5 losses near to that?!! You’ve lost £488. Trust me, you won’t just feel nerves; you’ll feel pain! Will you take the next trade? Will you hesitate? You decide to jump in one more time – and get stung for a loss of £62. What’s next?
This is the sort of thing that will happen. We’re not here to tell new traders how to get ‘nerves of steel’. We don’t teach or coach. Only the self-selected few will study hard, hone their strategies, find ways to manage their own psychology. Nobody else can do that for a new trader. There is advice out there, from free to expensive. At the end of the day, each new trader lives with themselves – alone. Yes – when you’re trading it’s you and you alone, with you! It’s ‘me’, ‘myself’ and ‘I’. No advice however sound can ‘alter your psychology’ – that’s for you to do.
Make no mistake – psychology is probably the biggest hurdle in trading. How would I know? Well, there are computerised systems out there that can do trading and win. This is for exploration at another time soon – but these do not replace the human touch. Most new traders will struggle with computerised systems in the early stages. Not because there is a machine that can fly you from one end of the earth to another means you can fly it!!
So – what’s next? Nothing. You can think about it – or not. You can decide or not. You can persist or not. Many are called but few are chosen – in this business however, you call yourself and you chose or un-chose yourself. Off you go.
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