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Fear When Trading & Trend Following

It is Sunday night before trading commences in Asia. I was sitting outside with candles and a glass of wine doing introspection regarding my trend following. I teach trend following because it reinforces the issues I need to deal with every day as well as it is a way of giving back and helping traders. I have had people help me and simply passing it along. I was thinking why many traders fail. It seems to be it is not about finding the right indicator or trading system. It really boils down to fearing to loss money. Well the reality any trade is 50/50 and any system or commodity trading advisor will go through draw downs and I promise you they will be uglier than you think. You need to temper your expectations and realize once you define your risk…you really do not have to have fear. Before I put on any trade, I know exactly how much I could lose on a trade except if there are gaps or limit moves. I have complete trust in myself and following my methodologies. I know if I do not follow them I can lose even greater amounts of money. I trust myself to appropriately act under any market situation. Every possible event is pre thought out. I expect the unexpected.

If you really want to succeed, I feel this is the only way to really succeed. You can not avoid losses. Do not even attempt to. It is a futile exercise. Focus your time and energy to learn a robust concept based on risk management and devote as much time as possible on trading psychology. This is really the holy grail. It is not about magical systems. It is hard work. It is not a get rich quick or retirement in a box. You need to develop your risk muscle. I promise it is work. However it is the path of progress to succeed.

Define your risk before you put on a trade and you will avoid fear. However bear in mind..we are dealing with uncertainty and anything can happen. There can be gaps or limit moves. If and when they happen …you have expected them already. You know you need to take your loss and move on…

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts, commodity options or forex can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results. You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

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