Scared Money by Mark Douglas & Economic Reports 11.07.2014
Posted By:- Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
For 2014 I would like to wish all of you discipline and patience in your trading!
Monthly unemployment tomorrow before cash opens! This will impact trading tomorrow. Do your homework.
I am sharing the below with permission from : http://www.daytradingpsychology.com/
“The best traders aren’t afraid.” – Mark Douglas, Trading in the Zone
“The brain is hardwired to prevent you from interfering with its fear circuits, its core defensive and reactive processes. Unfortunately, in trading this means you will feel much more fear than necessary.” – Kenneth Reid, Ph.D
In this section of the website you will find a great deal of information on Seven Factors that contribute to Self-Sabotage Syndrome, which is a complex syndrome with multiple causes. The causes are: Aversive Conditioning, Random Rewards, Mind Traps, Scared Money, Procedural Errors, The Trading Trance and Syndrome X
This page describes Scared Money, which is a natural human condition made much worse by Aversive Conditioning & Random Rewards. Follow the links to read about the other causes.
You have probably heard professional traders warn about trading with “scared money.” According to Mark Douglas, writing in The Disciplined Trader:
“In the market, the fear of losing one’s fortune is every bit as intense as the fear of losing one’s life from an attack by a wild animal. I don’t think I could put the difference between consistent winners and everyone else more simply than this: The best traders aren’t afraid.”
Why is trading so scary? Neurofinance has the answer.
Neurofinance studies the relationship between the brain and money. We now know that trading activates the same primitive centers in the brain that are responsible for self-preservation. These are the primal emotional and defensive layers of the brain that do not respond to will power (self talk). In fact, the brain is hardwired to prevent you from turning off its primal circuits, its core defensive and reactive processes.
Why? These processes, such as fight, flight and pursuit have great survival value. When these ancient parts of the brain are in control of your trading, however, you will automatically do the opposite of what you consciously intend. It may feel like self-sabotage, but it is not diabolical… it is biological. It is just your self-preservation instincts taking control.
It is difficult to manage an instinct, which is one reason why so many traders underperform and eventually fail.
Genetics does play a role. There is a gene for “jumpiness,” which makes some people much more senstive to loss or missing out or being wrong than others. There is also a gene for having a cool head. And, there is a gene that helps us be moderately reactive.
Normal human instinctual fear, which may be worsened by your genetic makeup, will interfere with trading success because it will make you more reactive to the randomness in the market. Winning traders are either not afraid or carefully manage their fear.
To eliminate self-sabotage, you have to reduce your fear to manageable levels. You can’t trade well with a scared brain.
Once trading becomes associated with painful experiences, traders come to expect losses and betrayal by the market. Because risk cannot be eliminated from trading, the inability to tolerate risk works against you. It makes you late in pulling the trigger (waiting for confirmation) or makes it impossible to stay in a good trade and let winners run.
To trade successfully, you need to reduce fear to a level where it is healthy, i.e. you respect the reality of risk, but your judgment and behavior are not impaired by fear. My Free Risk Profile is one way to evaluate your susceptibility to fear. Mytrader coaching program is focused on reducing fear so you can trade rationally.
If you take no other action today my friend, be sure you order my Positive (+) Neuroprogramming MP3 TRAINING A WINNING MINDSET. Nothing is more important than becoming proactive about your mental-emotional state while trading. It could save you thousands!
Kenneth Reid, Ph.D
GOOD TRADING !
Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. Past performance is not indicative to future results.
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Futures Trading Levels
|Contract Dec. 2014||SP500||Nasdaq100||Dow Jones||Mini Russell||Dollar Index|
|Contract||Dec. Gold||Dec.Silver||Dec. Crude Oil||Dec. Bonds||Dec. Euro|
|Resistance 3||1160.5||15.78||80.81||142 5/32||1.2644|
|Resistance 2||1154.7||15.62||79.89||141 25/32||1.2591|
|Resistance 1||1148.7||15.53||78.95||141 7/32||1.2485|
|Support 1||1136.9||15.28||77.09||140 9/32||1.2326|
|Support 2||1131.1||15.12||76.17||139 29/32||1.2273|
|Support 3||1125.1||15.03||75.23||139 11/32||1.2167|
|Contract||Dec Corn||Dec. Wheat||Jan. Beans||Dec. SoyMeal||Dec. bean Oil|
|FriNov 7||2:00am||EUR||German Industrial Production m/m||2.1%||-4.0%|
|EUR||German Trade Balance||18.3B||17.5B|
|2:45am||EUR||French Industrial Production m/m||-0.1%||0.0%|
|EUR||French Gov Budget Balance||-94.1B|
|EUR||French Trade Balance||-5.2B||-5.8B|
|All Day||EUR||ECOFIN Meetings|
|8:30am||USD||Non-Farm Employment Change||235K||248K|
|USD||Average Hourly Earnings m/m||0.2%||0.0%|
|10:15am||USD||Fed Chair Yellen Speaks|
|2:00pm||USD||Consumer Credit m/m||16.6B||13.5B|
|2:30pm||USD||FOMC Member Tarullo Speaks|
This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading.