Five Steps to Fearless Trading

Just do it.’

You’ll probably recognise this phrase instantly.

It’s one of the most famous slogans of all time. One that’s made Nike a global success.

In fact, the brand is so well-known that it only requires a logo. Chances are you’ve recently seen the distinctive symbol on the shirt or cap of a victorious sports star.

You’ll remember I wrote about fear in last week’s update. This powerful emotion can stop a trader in their tracks. It can make the trading process unbearable, and ultimately end careers.

In a minute, I’m going to explain how you can manage fear. I’ll tell you about five strategies I use myself. They’ve helped me go forward when fear was pulling me back.

But first, I’m going to tell you the backstory of ‘Just Do It’.

Have a read of the next few lines. And imagine some inspirational images and music as you go…

Listen, if you can run a mile…run a race…you know what, run a marathon, better still…out run a movie star [picture Tom Cruise in full flight].

If you can ride a bike, ride that thing [a mechanical bull], ride a real bull, ride a tougher bull, what sort of bull is that…[it’s a rhino!].

If you can play tennis, take a serve, beat the champ, beat her mentor, come on — you’ve got this…beat Serena.

Just Do It’ 25th Anniversary Commercial

You can see why ‘Just Do It’ has become a personal mantra for millions of people.

And it’s not just fitness types.

The phrase works in any situation. You could be popping the question or taking a trade. Its intensely personal message has universal appeal. It gets you fired up to take on the world.

But jokes aside, the origins of ‘Just Do It’ may surprise you. It came about from the last words of a death row inmate — Gary Gilmore, in 1977.

When asked if he had any final words, Gilmore simply said, ‘Let’s do it.’ The creator of the Nike slogan — Dan Wieden — changed the first word to ‘Just’, and the rest is history.

Think about that…

Gilmore was moments away from one of the most primal fears of all.

And what does he do? He calls it in.

Trading isn’t anywhere near as confronting. But it can still create a lot of fear.

Why you need to reduce your fear as a trader

I began my career at Bankers Trust in 1991. My first steps inside the dealing room were like setting foot on a new world. I still remember the noise and activity like it was yesterday.

The trading floor was full of smart, alpha-type personalities. These were self-assured people who weren’t afraid of anything. Well, at least that’s what I thought.

My first trading role was on the Foreign Exchange desk. My supervising trader was a guy called Garry. He was in his late 20s, and he had made the bank a lot of money.

But something about Garry took me by surprise.

Let me give you a clue…

There were three words across the top of his computer screen. All in thick black letters.

I’m sure you’ll know the ones. They were of course: Just Do It.

Now, you may think a top trader is immune to fear.

But the truth is, many aren’t.

You see, fear is a natural response to potential danger — it’s in every human’s genetic wiring. The difference is that some people manage fear better than others.

It turns out that Garry had trouble opening a trade. He would do the analysis, set the levels, but then hesitate to pull the trigger. Every entry was an internal battle.

I ran into Garry a couple of years ago. He’s still in the markets, but not as a trader — the emotional strain gradually wore him down. Garry now works in a bank’s compliance area.

Don’t worry if this sounds familiar. Many traders suffer the same anxiety.

The good news is that it doesn’t have to be this way. There are things you can do to reduce fear’s impact. And this could make the difference between trading or stopping.

If you’re interested in which stocks could potentially be top performers in 2018, check out our analyst Sam Volkering’s free report here.

Take control of your fear in five steps

Now, these steps aren’t just for new traders. Anyone can benefit from them. I still use these strategies whenever I’m outside my comfort zone.

OK, here they are:

Step 1: Start small

Say your car breaks down, and you need to spend $300 on repairs. Would you give the loss of that money a second thought in a few days?

I’m guessing your answer is ‘no’. It’s hardly a life changing sum.

You can use the same logic when fear strikes with trading. Simply risk an amount of money that you wouldn’t particularly miss. There’s nothing to fear when a potential outcome isn’t that bad.

Keeping the stakes low puts fear back in its box.

Step 2: Think in the right terms

I remember receiving some excellent advice when I was starting out. A wise older trader told me not to think of my trading stake as everyday money.

He said $1,000 could buy a holiday or a new suit. The trick is not to mentally link a trading profit or loss to something real. It will just increase the stress of managing the trade.

Instead, think of trading funds as the score, not a bank balance.

Step 3: Know your risk

Uncertainty gives fear a foothold. It’s the ‘not knowing’ that brings so many people to a halt. Our imaginations can dream up some highly unlikely scenarios.

The key with trading is to understand what’s actually at stake. Work out how much you could lose before entering a trade. If you’re comfortable with the risk, then you’re ready to go.

Quant Trader makes this part straightforward. The algorithms calculate the exit levels — there’s no need to guess when to get out. It’s then just a matter of doing some basic maths.

Step 4: Gradually build risk

Usain Bolt is fast — very fast. But it wasn’t always that way. He began life as the slowest person in the room. Becoming the fastest man on the planet took time.

Trading is no different. Start slowly, and then consider gradually increasing risk as your confidence and skill grows. You’ll find this naturally builds your tolerance for trading larger amounts.

Remember, nothing bad can happen when you take baby steps. Fear doesn’t get a look in.

Step 5: Get a mentor

This has been a key factor throughout my career. Learning from mentors put me on the right path early, and helped me through lots of uncertainties.

A good mentor is like a role model. You get to see what makes a successful trader tick. Their profits and losses are like a road map. They accelerate your learning and help you lift your game.

Now, don’t worry if you’re not mates with a top trader…

Quant Trader is your ready-made role model. It’s a case of following the system’s tried-and-tested strategies. You can then copy them for yourself, and make them your own.

My aim with the weekly updates is to pass on my experience. The first stage is to build your understanding. After this comes confidence…the opposite of fear.

You know, no one ever served for the Open while watching from the stands. To be a contender, you must be on the court. There’s no other way to hold the trophy aloft.

Trading is no different. You can’t win if fear stops you from taking the trades. It’s why my colleague wrote ‘Just Do It’ on his computer screen.

Consider trying the strategies I wrote about today. They could be just the tactic to put fear out of the game.

Come on — you’ve got this — take the trade and let it run!

Until next week,

Jason McIntosh,
Editor, Quant Trader

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