So what exactly does it mean to be “trading scared”? Well, allow me to begin with an example:

This morning I was looking at buying a washout on a stock ($ANGI, to be exact). I’ve had some good success with buying morning washouts on volatile stocks lately and decided that this was a good candidate. I entered a decent size shares, had my mental “stop” in place and let the trade work out. As my eyes shifted around to other things, I noticed out of the corner of my eye that a massive print lower in the stock happened.

Staying calm, I wanted to size out on the uptick and re-assess the situation to hopefully wait for another setup in order to size back in. Well, needless to say this never happened and there was another massive downtick in the stock – when I sent the order to fill at the offer, it didn’t fill and had to cancel and resend to finally get a fill.

It happens sometimes I guess – you plan, plan, plan and things just happen that are out of your control. As a trader, I have learned over the years to move on and make back the losses slowly throughout the day……but for some reason, this rattled me.

I made a few more trades later in the day, but I noticed that I was cutting my profits too soon and not letting them work out the way they should. This is a rookie mistake; after having a big loser, trading differently that you normally would.

So what is the point of all this? Well, the first point is to REALIZE what you did wrong and fix it. Some of the ways I could have coped better with this is trading smaller size and ADDING to my winners. This would have given me more confidence to let the rest of the day work itself out and perhaps even finished in profit.

Another thing I should have done was to detach a little bit from the computer Рtake a walk and come back with a fresh set of eyes on the market.  Around my desk, I have several notes that remind me what I am supposed to be doing and to keep my psychology in-check. One of those notes reads as follows:

Remember that this is a mathematical process, of which you are not respecting by skewing the numbers with cutting profits too soon. You WILL have red days. This is a fact and they should be welcomed, because they need to happen in order realize profits in the future.

Good advice! I’ll be sure to remember it next time and learn from today to become even better.

Good Luck Everyone.