5 Steps To Improve Your Share Trading Ability and Reduce Fear

I have three words for you…

Just do it.

You probably recognise this phrase instantly. The words comprise one of the most famous slogans of all time…one that’s made Nike a global household name.

The brand is now so well-known that it only requires a logo — a distinctive sloping ‘V’ or swoosh. You may have seen it this week’s Australian Open champions.

You’ll remember I wrote about fear last week. This is an emotion that can stop a trader in their tracks. In fact, one member is close to quitting. You can read about this here.

Today, I’m going to explain how you can manage fear. I’ll tell you about five strategies I’ve used myself over the years. But first, I’m going to tell you the story behind ‘Just Do It’.

Have a read of these next few lines. They come from a Nike advertisement. Imagine some catchy music and inspirational images as you read.

Listen, if you can run a mile…run a race…you know what, run a marathon, better still…outrun 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. It gets you fired up to overcome your hesitations and take on the world.

And it works. I remember thinking ‘just do it’ right before jumping off a cliff in Queenstown last week! You can read more about that in last week’s update.

But jokes aside, the origins of the phrase 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.

It’s interesting. Gilmore was moments away from one of the greatest primal fears of all. And what does he do? He calls it in.

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

My boss’s message to himself

I began my trading career at Bankers Trust in 1991. Stepping into the dealing room was like arriving in another world. I still remember the noise and activity like it was yesterday.

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

I was a junior trader on the Foreign Exchange desk. My supervising trader was in his late 20s, and he had a history of making money…lots of it.

But there was something else. Something you wouldn’t expect from a star trader.

Let me give you a clue. There were three words across the top of his computer screen — all in thick black letters. The words were, of course, ‘Just Do It’.

You may think a top trader is immune to fear. But the truth is many aren’t. Fear is a natural response — it’s in our genetic wiring. Some people just manage their fears better.

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

Don’t worry if this sounds familiar. There are things you can do to reduce the emotional strain. These could make the difference between trading and stopping.

Five steps to less fear

Now, these steps are not just for new traders. Anyone can benefit from this. I still use the following strategies whenever I’m outside my comfort zone.

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? Probably not — it’s hardly life changing.

You can use the same logic when fear strikes with trading. Simply risk an amount of money that you wouldn’t particularly miss. There is nothing to fear when you don’t care.

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.

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

Step 3: Know your risk

Last week, I told you about my experience on the Canyon Swing. I was terrified, but it didn’t stop me. I knew my risk was miniscule, so I was able to override my fear.

The same applies to trading. You need to know your risk entering a trade. Work it out in dollar terms. If you’re comfortable with the risk, then you’re ready to go.

Quant Trader makes this part easy. 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 gradually increase risk as your confidence 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 was a key factor in my career. Having a mentor saved me years of trial and error.

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

Don’t worry if you’re not best mates with a top trader. You can use Quant Trader in the same way. I’m here to help you become a better trader.

My aim with the weekly reports is to mentor you. The first stage is to build understanding. After this comes confidence…the opposite of fear.

Think of fear as a roadblock. These strategies will help you clear the path.

Remember, 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.

Try 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,
For Markets and Money

Editor’s note: Do you sometimes find it hard to ‘pull the trigger’ on a trade? Don’t worry if you do, you’re not alone — fear causes many people to miss standout opportunities. But it doesn’t have to be this way. There are strategies that can help you override your fears.

Here’s something you should do — check out Jason McIntosh’s Quant Trader advisory service. It’s a fully algorithmic trading system for ASX stocks. Quant Trader scans practically every company. It then tells you when to buy and sell. Not only that, Jason aims to make you a better trader. He does this by passing on his two decades or experience via his weekly report.

Try it. See if it makes sense to you. It could change the way you trade forever.

Jason McIntosh

Jason McIntosh

Jason is a professional quantitative analyst. Before he graduated in 1991 he joined Bankers Trust — a Wall Street investment bank — to be a trader.

After Bankers Trust was taken over in 1999, Jason, already financially independent, co-founded a stock market advisory and funds management business called Fat Prophets

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