Katz’s Corner: How Do I Pull the Trigger?

BellaKatz's Korner, Trading Psychology8 Comments

I sent this question from an SMB reader to Dr. Jonathan F. Katz, performance coach, at High Performance Associates.

I’m sending this message as I am in need of help with regard to a specific issue that I’m currently experiencing. I have studied the market vigorously every day for the past two years. I’ve read and studied many books on topics such as distressed Graham-style investing, statistical/merger/futures/and volatility arbitrage, level-two-data day trading, technical analysis, macro analysis futures investing, algorithmic and HFT trading, etc. (I’ve also read One Good Trade, which I was very impressed with).

I’ve read countless books, listened to audio books, watched seminars, read articles, and have been tracking the market every single day. I have had great conviction about where a stock, future, or option would go next on countless occasions. My problem is, for lack of a better phrase, I’m scared of losing my money and thus I struggle to trade at all. I cannot “pull the trigger”. I’ve been right far more times than I have been wrong and I am hoping that you may provide any useful insights that may help me develop the required mind-state to “pull the trigger”. I do know how to utilize stop losses, set up hedged trades, and I’m familiar with a few mathematical equations for optimal trading sizes, including formulas such as the Kelly Criterion. Trading and investing is my passion, since I spend every waking hour studying the market, but I simply cannot “pull the trigger”. If you have any tips I am all ears.

Dr. Jonathan F. Katz of High Performance Associates Responds

There is good news and bad news in responding to this inquiry. The good news is that this is a common issue in the world of high performance athletics and trading, namely, an overemphasis on technique, knowledge and content/information at the expense of the emotional/psychological components necessary for successful performance. The bad news is that usually athletes/traders are much more comfortable studying the “Xs and Os” of their performance (the technical/strategic part of the “game”) than they are addressing, analyzing, and discussing their own psychological makeup, tendencies, personality styles, etc.

In order to overcome your fears associated with “pulling the trigger”, you must spend as much or more time reading about the psychology of trading and high performance, and perhaps consulting with a performance psychologist to more specifically address your individual issues and fears which are getting in the way of making this career transition.

8 Comments on “Katz’s Corner: How Do I Pull the Trigger?”

  1. If struggling  traders spent half as much time on self understanding as they do studying charts, the likely outcome is performance improvement; the worst thing that would happen would be no change in performance.

    But most traders will continue to focus everywhere but where they need to. Looking inward and addressing fears is not as interesting as looking at charts and studying set-ups, Plus, for many traders the connection between internal state and trading performance is not explicitly known.

    Andrew Menaker, PhD
    Trader and Trading Psychologist

  2.   I’m an expert on the subject, as  suffering with this disease for a lifetime makes me an authority.

      The problem is, you are not comfortable with being wrong. Even if you’re only wrong once out of 3 times. Or wrong half the time..  The attempted avoidance of losers is very likely the root cause of your ‘illness’.

     The cure would be to come to terms with the fact that losing on a trade ( or any bet) is going to bother the hell out of you, but you can’t play the game if you won’t accept the losers.

     Some of us just need to be right all the time, and since that is impossible, we have to try to block that instinct.

     Most of the traders you see banging away through large drawdowns and losing streaks, like bulls in China shop, are hard wired that way.  Born to the trade, so to speak.

     We’re not, so you have to ‘fake it’. 

     Good luck.

  3. I know exactly what you mean. I recently wrote two blog pieces about this,  unavoidable disappointment as a part of trading http://bit.ly/fKuvu5  ; and how most trading errors are attempts to avoid discomfort http://bit.ly/lXWnQL

    As an alternative to blocking your instinct, you can  learn why you are compelled to do certain things, understanding the underlying motivation e.g. ‘ being wrong on this particular trade means that I’m a failure at trading, so I’ll just hold it longer to give it a chance to come back’,


  4. I completely respect this person for bringing up this issue. I would like to tell this person they are not alone. Keep marching on soldier.  

  5.  Mark Douglas’ book Trading In the Zone may offer some insights into overcoming this issue.  The book discusses and offers ways to deactivate the fears of losing or being wrong and get closer to performing in the ‘zone’ that elite athletes attain.  Wishing this SMB Reader best of luck.

  6. I don’t think it’s about losing money or being wrong but wanting to be perfectly right.  

  7. reduce the size men ! in time you will get more confidence about your abilities.

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