Lets face it, we all hit a brick wall in our trading career at some point or another. And sometimes this wall seems like its part of the Great Wall of China - you just feel like you cannot get over the hurdle. Been here? Yeah, me too... But there is a solution! And this has worked for me as soon as I implemented it.
Here is what you do:
Take a sample size of 20 trades.
Decide how much you're willing to lose in total if you lost all your trades and make sure this is something you're very comfortable with. Go down as much as you have to until you're at the "I don't care if I lose it" level, this is what you're comfortable with - say its a $1,000 for example sake.
Find the most you're going to risk per trade, so $1,000 / 20 = $50
Work out your money management per trade now. I use a default stop of 50 pips for example. So for me I would have to risk $50 / 50 pips = 1$ per pip - or 0.1 standard lot.
Commit to executing every trade regardless of what you think of the outcome. This is crucial and this is the main reason you're doing this exercise.
Now, when you get your setup you have to take the trade! Don't hesitate, don't think twice, just take the trade! If you find you're still fearful, then you're not really at the "I don't care if I lose it" level. Reduce you total risk even more. Go down to 1 cent per pip if you have to, but it has to be real money. If you cannot risk at least 50 cents per trade just pull the plug on the whole thing.
Now that you've sorted your risk management to a very comfortable level, your main objective is to focus on trade execution and trade execution only! You get in the trade where you've planned to get in and you get out where you've planned to get out. No second guessing, no thinking, just executing. Like a basketball player practicing free throws in practice, you're executing your trades. The point here is to get into a habit of executing your planned trades without second guessing them and also to find out whether your trading edge is actually working and what you need to adjust objectively.
When you start doing this, you will begin to gain confidence and to see that actually, you don't need to know whats going to happen in the market every time in order to consistently make money. What you need to do is just execute consistently and confidently and the money will come, assuming you have an edge that is profitable.
Once you start gaining confidence, begin to increase your position size and monitor closely whether there are negative changes in your execution. If there are go back down to a lower position size.
That's it, its one of the best techniques for overcoming fear and building confidence that I've come across in my trading career.
Source: IndependentInvestor