Reader Q & A 3

Dear FnG,

I know I have had trouble remaining positive and unemotional the past few weeks as well as being disciplined.

On top of your ideas for the webinar, my question would be, how can a new trader have confidence when they have never made money? How do I know this can really work? I know other people can make money, but how can I build confidence in myself when I have never made decent money. And I definetly have a problem trading not to lose, instead of trading to win. How can I stop that? Most days, I am just happy to get back to even. I never have the confidence to get over the hurdle called "fear of losing". Today, I was up $133 by lunch, and I was done. I was too afraid of giving it back to the market.

Also, my brain tells me to do the opposite of what i should be doing. My intuition tells me to buy into the strength instead of selling into it, when I should have been buying the weakness that was before the strength. Then I am long at the top and the strength (pop) just disappears and the stock drops. Does that make sense? Because it is really hard for me to flip such strong beliefs and feelings.

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First of all, you are not in a unique position. Most of us have been there. The odds are stacked against the new trader. You have to go against seasoned pros that have lived through the ups and downs and emotional turmoil right from the start. It's a tough business.

" How do I know this can really work? The markets can actually pay you nicely once you can get you mind around how it works. How many times have you only been looking at a play but not actually trading and have seen a great opportunity that did go the way that you thought it would? Many times I would guess. And if you look back at the days you can see the telltale signs of dojis, candles and volume that indicated an opportunity was coming. So if the markets provide the information and you don't take advantage of it, then what you need to happen is to have a fundamental shift in your thinking.

1. Start by looking back at when you saw your very first chart. If you were like me, you were absolutely clueless as to what all those lines and numbers meant. Now think to the present day and how much more you know. Congratulate yourself on applying yourself and learning. See the tiniest step of progress as another step in the right direction to the destination of becoming a successful trader.

2.Confidence in yourself can come in several forms. If you can follow your trading plan without deviation, it will give you confidence. If you can focus your mind on only the task at hand without being distracted, it will give you confidence. If you can cut your losers quickly, it will give you confidence. If you can build a couple of winning trades today, it will give you confidence for tomorrow.

3. Trading to win and not to lose is a change you must make. A winners mindset allows them to focus on the probabilities of the future instead of the problems of the past. The only time you should think about the past is when you take a cold blooded look at the trades you did, critique them and learn from the mistakes. How can you stop doing it? Well this issue goes to your core as a trader. You must believe in yourself, your plan, your ability. This comes about by acknowledging the small victories. You can build on this base one trade at a time. Maybe you are trading with money that you can't afford to lose. If that's the case I would recommend that you stop trading while you build up your account and work on your edge and your emotional components that will in the future led you to be a winner. The market will wait for you.

4. Ask yourself the following questions and answer as truthfully as you can: Am I afraid of losing money? Why? Am I afraid of being wrong? Why? Do I stick to my plan? If not, why not? Do I have a edge? If not ,why not?

These will all work together to either make or break you. When you do develop an edge that works for you and you have a trading plan in place to take advantage of the opportunities that come your way, then trading will become as easy as it looked before your mind got sidetracked.

Making the mental shift from negative to positive requires first your goal to change into a successful trader, then the will to carry it through, then the plan to make it happen, then your skill to put it into practice. You need all these steps.

Nobody is different from anybody else in that we are all born with the same body and mind. Life experiences colour your ideas but in the end we all have free will to decide what we want to do. If we are not happy where we are then we must decide to change our situation for our betterment. You can decide to change. You can carry through with those ideas. It takes hard work. If you stumble and fall, you must want to dust yourself off and try again. Focus on the areas that you want to change. Think about how best to go about it. Put your new plan into action.