Now, you’re going to recognise this next phrase instantly. It’s one of the most famous slogans of all time. In fact, it’s become the personal mantra for millions of people.
Okay, are you ready? Right, here goes: ‘Just do it’.
So, what does a catchy tagline have with trading. Well the answer might surprise you. And I’m going to tell exactly why in a moment.
Now, you might remember I spoke about fear in last week’s video. This powerful emotion can stop a trader in their tracks. And it can make the trading process unbearable, and ultimately end careers.
In a minute, I’m going to explain how you can manage fear. I’ll tell you about five strategies I use myself. They’ve helped me go forward when fear was pulling me back.
But first, I’m going to tell you a story from early in my career.
You see, I got my start at Bankers Trust in 1991. My first trading role was on the Foreign Exchange desk, and my supervising trader was a guy called Garry. He was in his late 20s, and he’d made the bank lots of money.
But something about Garry took me by surprise. Let me give you a clue. There were three words across the top of his computer screen. All in thick black letters.
I’m sure you’ll know the ones. They were of course: Just Do It.
Now, you may think that a top trader is immune to fear. But the truth is, many aren’t.
It turns out that Garry had trouble opening a trade. He would do the analysis, set the levels, but then hesitate to pull the trigger. Every entry was an internal battle.
Don’t worry if this sounds familiar. Many traders suffer the same anxiety. The good news is that it doesn’t have to be this way. There are things you can do to reduce fear’s impact.
Now, these tactics I’m going to tell you aren’t just for new traders. Anyone can benefit from them. I still use them whenever I’m outside my comfort zone.
Okay, here they are:
The first tactic is to start small
Think of it like this. Say your car breaks down, and you need to spend $300 on repairs. Would you give the loss of that money a second thought in a few days time?
I’m guessing your answer is ‘no’. It’s hardly a life changing sum.
You can use the same logic when fear strikes with trading. Simply risk an amount of money that you wouldn’t particularly miss. There’s nothing to fear when a potential outcome isn’t that bad.
Keeping the stakes low puts fear back in its box.
Tactic 2 is to think in the right terms
I remember receiving some excellent advice when I was starting out. A wise older trader told me not to think of my trading stake as everyday money.
He said $1,000 could buy a holiday or a new suit. The trick is not to mentally link a trading profit or loss to something real. It will just increase the stress of managing the trade.
Instead, think of trading funds as the score, not a bank balance.
Tactic 3 is to know your risk
You see, uncertainty gives fear a foothold. It’s the ‘not knowing’ that brings so many people to a halt. Our imaginations can dream up some highly unlike scenarios.
The key with trading is to understand what’s actually at stake. Work out how much you could lose before entering a trade. If you’re comfortable with the risk, then you’re ready to go.
Tactic 4 is to gradually increase risk
Like, we all know that Usain Bolt is fast, right? But it wasn’t always that way. He began life as the slowest person in the room. Becoming the fastest man on the planet took time.
Trading is no different. Start slowly, and then you could consider gradually increasing risk as your confidence and skill grows. You’ll find this naturally builds your tolerance for trading larger amounts.
Remember, nothing bad can happen when you take baby steps. Fear doesn’t get a look in.
And finally, tactic 5: Get a mentor
This has been a key factor throughout my career. Learning from mentors put me on the right path early, and helped me through lots of uncertainties.
A good mentor is like a role model. You get to see what makes a successful trader tick. Their profits and losses are like a road map. They accelerate your learning and help you lift your game.
Now, don’t worry if you’re not mates with a top trader.
My aim with these weekly videos is to pass on my experience. The first stage is to build your understanding. After this comes confidence…the opposite of fear.
So that’s all for this week. If you’re watching this anywhere other than my website motiontrader.com.au then come check it out. You’ll find all the free goodies there. I think you’ll like what’s on offer. And if you liked this video, or even if you didn’t, scroll down and let me know what you thought.
So until next time, I’m Jason McIntosh, and let’s find some trends this week.