The latest installment of Pancakes and Pivots was a really important one, especially for those of you who are new traders. The main topic discussed was fear management. In particular, I explained the difference between fear of the known and fear of the unknown.
We all have fear. It doesn’t matter who you are or what your background is. We’re all human beings and we all experience those basic emotions. And how you manage those emotions translates strongly to your success as a trader. My main goal with Access a Trader isn’t to be a teacher or show you what to do. My main goal is just to show you what not to do — how not to make catastrophic mistakes. Ultimately, knowing what not to do makes the difference between having fear and having fear with reserve aggression.
So let’s talk more about those two types of fear I mentioned.
Fear of the Known
What does it mean for a trader to have a fear of the known? Well, take me for an example. I grew up in one of the poorest areas of Brooklyn. If you asked me what a mansion was when I was a kid, I’d tell you it was a 2-bedroom apartment. So for me, fear of the known is the very healthy fear of knowing that myself, my wife, and my kids can have our quality of life stripped away if I really screw up. I’ve been trading for almost 18 years now and that’s a fear that I have with me still, every single day.
Fear of the known is what comes to fruition if you break every rule and trade without a process day after day. It’s a fear that keeps you in check. That’s where you say, “If I continue to trade like a lunatic I’m gonna wind up back in the poor house one day.” So, again, fear of the known is very much a healthy fear. While I carry that fear with me, it doesn’t change the fact that I trade without doubting myself.
Fear of the Unknown
When you’re a new trader, what’s the first thing you do as soon as you put on a trade? It’s probably asking where your stop is, right? That’s only natural. You have a limited track record with the stock you’re trading and a limited track record overall. You might be thinking, “This trade looks good, so why am I so scared? Why am I hesitant to put on normal size so I can make real money on this trade? Where is my conviction?” Those where the questions that I was asking myself for years when I started out trading. I was scared to death.
So what happened? How did I overcome that fear? Simple, I developed a process and didn’t deviate from it.
An uneducated, undercapitalized trader who doesn’t have any type of validation from the market is going to have fear. There’s no way around it. Social media loves to paint this picture that if you study hard and you just want success more than everybody else, then you’ll achieve that success. And it’s utter bullshit — excuse my French. But it’s true, that is a bullshit story. I don’t care how much you want it — if you don’t have a valid process you’re going to continue trading with fear and you’re never going to reach the next level. If your process sucks but you want it really bad, you’re still going to lose money. That’s the reality.
Finding a Valid Process
The fear of the unknown completely handicaps you from acheiving your goals. So if you want to overcome it, you have to put yourself in a position of control. I’ve said it many times before — I don’t care what your process is, but you had better have a valid process. You can find one through back-testing and experience or by educating yourself on an already validated process.
The process I trade with and share with the Access a Trader community is the PS60 Theory. We’re the only people in the world who are trading this way. And the best part is that it’s not speculation — you can watch trades play out organically in real time.
In the video below, I go into greater depth on fear and my own story of overcoming it. In the full video for members of the Access a Trader community, I also talk about how the PS60 Theory specifically helps me to manage fear and trade with confidence. Click the button at the bottom of the page if you’re interested in gaining complete access to these videos, full nightly recaps, next day “watch lists”, and more.