Tag Archive for: Trading Price Action

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Why We Are Afraid to Lose & How to Transform This Fear

Have you ever failed to the pull the trigger, even though your ideal setup was right in front of you? What about feeling paralyzed to hit the buy/sell button after a big loss? Have you noticed how your mind tends to race right before you fire off a trade as you think about your last loss?

All of these debilitating experiences tend to follow our fears, particularly being afraid to lose. Ironically, our ‘being afraid to lose’ often times goes beyond the potential loss of money. In most cases it has to do with something beyond the pure dollars at risk. In many cases, it becomes one of the primary hurdles a trader faces and never overcomes.

fear of trading and transforming fear 2ndskiesforex

This article will first go into the underlying reasons why we are afraid to lose. Then I will share a method how to transform this fear to enhance your trading performance.

Behind The Curtain
In reality, there are several ‘reasons’ why we experience being afraid to lose when we are trading. A few examples are;

a) Perhaps we have an unconscious fear of making a mistake and what that might bring (i.e. a parental punishment)
b) We fear the potential loss in money and our ability to make it back
c) Making another mistake will only confirm our suspicion that we cannot trade

I could probably spend an entire day listing dozens of reasons why we experience this fear. But behind the curtain of it all I find are two variables which remain constant;

1) The anticipation of what has yet to come
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2) An unconscious or limiting belief that perceives the potential outcome as a threat, dangerous or painful

The first one is something the Buddha once said, that ‘Fear is the anticipation of what has yet to come‘. Imagine if we approached our next trade and had no anticipation of what was to come next. We just trusted our system and pulled the trigger, then let the system play itself out.

More than likely you’d experience a lot less emotions and the debilitating physical responses that tend to affect our thinking. Although many people get this idea ‘intellectually’, it is easier said than done. Often it takes years of practice, training and experience to have happen moreso than not.

fears are the stories we tell ourselves 2ndskiesforex

As to the second one regarding ‘unconscious or limiting beliefs’, most of the time, we are not just trading the price action setups in front of us – we are also trading our thoughts and beliefs about money, our ability to make money, what our perception is of our P&L, our current trading skill, and more. In most trading situations, we are not just trading setups at key levels – we are trading our unconscious limiting beliefs + our motivations for why we are trading.

How To Transform These Fears
There are three things you can do help reduce and transform these fears. They are;

1) Expand Self-Awareness

2) Awareness Practices In The Moment

3) ERT to Remove Unconscious or Limiting Beliefs

Expanding Self-Awareness
The first step to expanding your self-awareness is to recognize how our thinking, emotions and perceptions in the moment affect our interpretations of things, particularly related to trading. When you do this, you begin to realize how these ‘perceptions’ of your trading will color your experiences and memories around trading. This can have an empowering or debilitating effect on your trading performance.

A trading journal also helps us to see how our trading behaviors often repeat, and thus help us to become aware of the mistakes we make frequently. This is to help keep us honest and in check about how we are really doing from day to day.

Awareness Practices in the Moment
One awareness practice that helps us in the moment is a silent meditation practice. I am not talking about a guided visualization, but a mindfulness practice designed to help us become aware of our mind, thoughts and mental activity in the moment. By sitting every day before you start trading, you can calm your mind and see how the traffic of thoughts can affect your trading.

If you think your mind is busy while you are just sitting trying to focus on your breath while little to nothing is going on – imagine what its like during trading?

Meditation and mindfulness practices shed a light on how our mind works and is working in the moment. By having a contextual experience of calm, clarity and focus, you can recognize when you are not calm, clear and focused.

meditation mindfulness practice and awareness in trading 2ndskiesforex

Also, meditation and mindfulness practices help tremendously in expanding your self-awareness, so taking out two stones with one.

ERT to Remove Unconscious / Limiting Beliefs
Sometimes we have unconscious or limiting beliefs which interfere tremendously with our trading. If you find yourself repeating the same mistake without knowing why, in 99% of the cases, it has to do with an unconscious or limiting belief.

Our mind stores memories like a bunch of pictures stuffed in a shoebox, so your memories around money when you were a kid could be right next to your memories around trading. Activating memories of one can excite the other, and thus affect your trading performance in real time.

These often take the longest to uncover, transform and remove, and could take years of both meditation and awareness practices. One short cut to this process is ERT Training which helps you to discover and transform them quickly. We actually have an ERT Training program specifically built for trading. Many traders have already gone through the program and noticed tremendous changes in their trading.

fearless of risk jumping into ocean 2ndskiesforex

One final note about doing the three above is they inevitably lead to greater market awareness and more profitable trading. This comes from seeing more of what’s going on in the markets finding clues others would not since you are less inhibited by your fears. Intuition, confidence and your learning curve all tend to increase heavily when you build self-awareness, expand your awareness in the moment and remove your limiting beliefs.

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2 Tips For Summer Forex Trading

Often due to low liquidity, summer forex trading can be fickle, whimsical and often times dull. Staring at charts for hours or days when the price action is slow isn’t going to make you a better trader, or make more profits. We need to be using our time to improving our edge whether we are trading or not. So what do you do when the ‘watching the corn grow‘ moments come by?

Read more

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Trading Price Action Wicks in the Forex Market

 

Wicks are an interesting phenomenon in price action formations and are virtually a part of every candle.Wicks can form on the top, bottom or both sides of a candle and represent the highs and lows of the price action for that candle on that time period.

What is important to remember about learning to read price action and wicks is that the wicks themselves are ‘rejection’ areas where the market simply rejected the prices of the wick.

It is important to note we are talking about the closes of candles and the wicks that form after because until a candle closes, it could be anything.However, once it closes, its final and its stamp is permanent.

When we have a wick that is large, that wick is clearly communicating to us for that time period (time compression for the candle) where the market was not accepting price.

If the prices were accepted, then price would remain there for a decent amount of time and close there.However, the fact that price does not close there means the market is rejecting that price value for that time.

If we are talking about 5min charts, then the market has rejected that price level via the wick for only 5minutes which is not that significant.However, when we start to look at 4hr or daily charts, this is significant.If you think about it, day traders are only witnessing two 4hr candles in a day, max three so for price to have a long wick on a 4hr chart is very significant as any day trader will take notice of the 4hr rejection as being a long period of time for price to be rejected – hence they will really have to think about trading against such a price action formation.Minimally, we suggesting looking at nothing less than the 2hr chart for significant wicks.

Taking a look at the example below, notice how every time the GBPUSD reversed, it did so with a very large wick and almost at the same price level?This was telling us the market simply did not accept prices at these levels with sellers aggressively entering the market quickly causing the pair to drop fast and not even close at those levels.The most notable one was the last wick with the wick being over 2/3 of the entire candles price range suggesting there was competition to sell the pair that high.

wicks

If the long wick is on a daily chart, day traders from all three sessions will have to take note of it and really be confident about their trade to go against the wick which is where the market rejected price for that entire day.If you are a day trader, you are only looking to be in a trade for a matter of hours and likely targeting an amount of pips less than the daily range for that pair (or at least you should be).

With that being said, they are also likely either targeting the price action within the days range or a breakout.However, what price levels are they watching if trading breakouts?

The highs and lows of the days candle which includes the wicks.And if the wicks represent a rejection zone, any day trades will have to be outside of it, thus making the chances of trades being placed inside the region of the wick less likely.

It should be noted when analyzing price action that the markets will usually make a second attempt to breach a price level before it gives up.Thus, if someone is going to reverse a pair, using the tail end of the wick offers the trader good risk/reward opportunities.

To learn how to find and trade these price action strategies, check out our Price Action Course which teaches you simple, rule-based proprietary price action strategies based upon 10+ years of quantitative data and analysis.