Monday, September 04, 2006

Fear to fail

Have you ever had this feeling, that you are intentionally hurting yourself by taking a certain trade? It happened to me on Friday. I had had a Breakeven day on balance but had to trade myself out of 3 -20tick Stops on Dax, which really hurt emotionally. I still managed to be green on balance on the day, but somehow I felt as if I should be due more on this day.

Having written about Gas earlier and having studied the charts I had decided, that a breakout above 6.000 would most likely constitute a valid breakout trade. But instead of waiting I plunged in at 5.975 right below the resistance on the 60min chart, which had held a few times already. I did that right before dinner and I took not 1 contract – as I should have done, QG being a new contract for me, but I took 2.

Every rule violated and I got slapped right in my face. Coming back from dinner I saw Gas down 10 ticks from my entry. To make matters worse my longer term bias overruled my daytrading rules and I held the 2 contracts over the long weekend instead of taking a 5 tick loss into the close on Friday.

Sunday night saw Gas down about 25 ticks at 5.750, the lower end of the range. A break below would invalidate the reversal pattern I saw on the 60min chart. But the range held and Gas ticked up. 6 h later the trade was closed at 5.995 for 4 ticks.

What saved me today was having a bit more experience in reading a chart and appreciating the huge daily range Gas is showing. Still I had to accept an extreme risk in a dumb trade to be able to close it at a profit.

Looking at Brett Steenbargers Blog I saw, that he had choosen to discuss exactly these problems in 2 posts (Part 1, Part 2) over the long Labor Day weekend I had experienced on Friday.

So let’s take his advice, step outside of yourself Chris and try to dissect yourself for the true reason of Friday’s behaviour.

The first 6 months of this year saw myself down on balance. Step by step I was gliding deeper into the red zone until I was down nearly 50% for the year. Starting June 1st this changed and now I’m about breakeven for the year which makes it 100% in 3 months.

I had changed my charts, which now speak to me, I had limited my trading size to 1 contract and I reversed a steep slide into a nice upward trend.

Now my trading plan again calls for a change and it seems I fear this change.
Increasing size is something I’m not comfortable with, even if now again I’m regularily trading contracts, which compared to say the Russel pay twice or even more per Tick. But it’s still just 1 contract.

It’s nothing tangible and I think, it’s most likely a fear to fail.

But doing nothing, remaining in the comfort zone I have build around myself will as well lead to failure. Only by stepping forward, by overcoming fear with trust in myself and the abilities I have gained will I be able to succeed. Doing what is neccessary even if it hurts emotionally.

Fear to fail is a powerful emotion and it sure can lead to the inability to trade at all or by forcing the issue, it can led your fears come true, so you have to admit to yourself, that the fear actually was well founded.

The voice, which gives me comfort, which tells me to trust myself , to trust my abilities is a calm one, not intruding, not forcing the issue, but persistent. And it is telling me, that I can continue doing what I did successfully for the last 3 months, following a good plan, which has reasonable goals and which allows for setbacks, which are no failure.

As so often in my life, I will again follow the calm voice and see where it leads me.