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Retail community,
Thank you so much for reading, week after week, my articles 🙏. What started as a personal journal is becoming a very exciting project. I can’t believe that when I write an article, 600 traders receive it in their inbox. It seems like a crazy number, and it’s all thanks to you. I did a little giveaway on my Twitter last week, offering two $50k Apex eval accounts.
Finally, I appreciate every one of you who like, comment, and share my articles (special thanks to Bonnie ❤️); it helps this Substack to grow, but let’s be honest, I would keep writing the same content with 0 subscribers as writing about my trading helps me tremendously.
Alright, let’s dig into this trading classic: FOMO (Fear Of Missing Out).
How FOMO impact(ed) my trading
It would be presumptuous to claim that I ultimately got rid of FOMO. We each have our core weaknesses, the ones that we’ll have to (learn to) live our whole life as traders with. For me, this list looks like this:
🏋️ Leverage;
😱 FOMO; and
😎 Over-confidence.
This is a pretty classic list; I’m no different than you.
The combo leverage-FOMO probably took a good 30 out of the 40 accounts I blew over my first ten years. This is perhaps one of the worst cocktails, as when you enter too early, chances are you'll experience, at best, a significant drawdown. Add leverage to it, and you can get your credit card ready for another deposit to your account.
As you read, it took me some time to figure it out. Better late than never…
However, it’s not the repetition of failure that made me significantly reduce the frequency of these mistakes, but instead building a methodical framework to test my strategies and monitor my trading and execution.
I’m a number guy; I won’t stop making a mistake, even if I know, deep down, that it’s wrong, until I see a number that proves to me I should be doing otherwise. It may be stupid, but it’s how it is.
I used to trade a lot with intuition; as I spent countless hours watching the 1min chart, I developed an intimate relationship with my beloved 1-min candlesticks chart.
Being a young trader, I would believe they would all work straight away, without any adjustment, after seeing a pattern occur a dozen times.
This led me to trade too many setups without any backtest, losing money, and not knowing where my losses were coming from.
I was taking up to 100+ trades a day at some point, getting murdered from both my questionable entries and the commissions.
Because I had the funny thoughts that every setup was a gold ticket to a fantastic life, I would be scared to miss it. Not only most of my setups were absolute shit, but I would also enter way too early.
To me, FOMO is not only the phenomenon of entering a trade too early. It’s the deadly cocktail of lacking a robust framework, not backtesting your ideas, and hiding more profound flaws like lack of confidence and laziness.
Turning FOMO into a strength
Ultimately, I turned this flaw into my biggest strength, forcing me to backtest absolutely every strategy that I use, which is not something I wasn’t doing in the past. It’s better to backtest your ideas using programming, but it’s not required. You can do it manually, it’s more time-consuming, but many people learn better by visualizing.
What clicked for me, and I’m not sure if I should share it or not, is when I tweaked a bit my backtesting programming to see how the results would be impacted if I entered at the middle of the signal candlestick (if you’ve never heard that term, google it, and it will lead you to the work of one of the most excellent technical trader of our area) instead of its close.
It led to a significant decrease in my trade frequency, but the profit factor was drastically increased. It’s also a game-changer, as I can now enter with a limit order on some of these strategies, removing slippage in the execution.
If you struggle with FOMO, you’re not alone, and there is hope. Share your best tips or mistakes to help another trader.
If you don’t want bad karma for your next trading week, share this article!
Have a great weekend.
Love,
Retail ❤️
If you want to give a try to Apex, you can use my affiliate link here with my 50% coupon code: RETAILCAPITAL, which will always apply the best promotion available.
Apex is a community of traders founded by Darrell Martin, a rancher and day trader who has built a thriving community of traders into over 30,000 members in over 150 countries since 2008.
I laughed at your brutal honesty when reflecting on prior blowups and 100s of 1m candle trades 😂, mainly because this is me right now! Hopefully I’m just a few steps behind you brother. Thanks for this article. Some gems there. Let the backtesting begin. What program do you use to backtest by the way?
Another great article! What time frame do you look at when you are buying the center of the signal candlestick? Do you use ADQD at all?