When you first start day trading, I think what most people fear initially is loss. Screens where unrealized losses are ballooning, the finalization of stop-losses, and shrinking account balances. These are certainly scary. However, as you get used to it, a different kind of fear emerges. That is the inability to press the entry button.
You are watching the order book. You are also watching the chart. The conditions don’t look bad. Even so, your fingers won’t move. While you are hesitating, the stock price moves, and you think, ‘I really should have entered.’ If you repeat this experience, not being able to enter becomes more painful than losing.
In this article, I will organize why day trading beginners become unable to enter, and how to deal with that state.
The state of being unable to enter is actually a natural reaction
First, what you want to know is that becoming unable to enter is not an unusual thing.
When people experience loss, they try to avoid the same situation. After losing several times in a row, becoming afraid to enter is actually a natural defensive reaction. It is not because your personality is weak, nor because you are not suited for it.
However, this reaction has a troublesome aspect. While you won’t lose if you don’t enter, you also won’t gain experience if you don’t enter. If you keep skipping trades out of fear, the opportunities to hone your day trading skills themselves will decrease.
Is skipping really safe?
If you don’t enter, you won’t incur a loss. In that sense, skipping seems safe.
However, skipping also has costs that are hard to see. One is that experience does not accumulate. There are many nuances of price movement that you only understand after actually trading. How does the depth of the order book affect actual execution? Is the position where you place your stop-loss order too close or too far? These are difficult to learn just by staring at the screen.
Another is the emotion when a stock you skipped goes up. The regret of ‘I should have entered’ distorts your next judgment. You panic so as not to miss out next time, and jump in when conditions are not met. Skipping and jumping in often stem from the same root.
Trades entered in a panic after skipping are also prone to having ambiguous stop-loss positions. As a result, you may end up inviting the very loss you were afraid of.
There are two types of ‘unable to enter’
Even though we say ‘unable to enter,’ the content is divided into two types.
One is when you skip because it doesn’t meet your criteria. It doesn’t satisfy the conditions decided in advance. This can be called a correct skip as a judgment.
The other is when it meets the criteria, but you are too scared to press the button. Even though the conditions are met, the fear of loss takes precedence. This is a skip based on emotion, not judgment.
As a beginner, these two are easy to mix up in your head. Even if the result of ‘I skipped’ is the same, the content is different. Unless you separate and think about them, you won’t see a clue for improvement.
Trying to break down the true nature of fear
When you are too scared to press the button, if you break down specifically what you are afraid of, your feelings will be a little more organized.
A common one is the fear of hitting a stop-loss. You imagine a scene where it moves against you immediately after entering and you hit a stop-loss right away. Next is the fear of being late to exit even if you make a profit. And the fear that the trend will change the moment you enter.
Much of our fear actually boils down to the anxiety of ‘what if something unexpected happens.’ You cannot completely eliminate the unexpected. However, if you decide in advance the amount you are willing to lose in the worst-case scenario, you can limit the scale of the unexpected. Fear tends to grow when it remains vague, but it often shrinks when quantified. For example, simply deciding beforehand ‘how much I am willing to lose on this trade’ can change the weight you feel when pressing the button.
Reducing share size to gain experience
A practical way to deal with days when you cannot enter is to reduce your share size.
With a significantly smaller number of shares than usual, the potential loss amount is also smaller. Fear weakens, making it easier to press the button when a situation meets your criteria. What is important here is not aiming for profit, but gaining experience in entering and exiting according to your criteria.
What you gain from small-amount trading is a sense of the market rather than money. How price movements look from entry to exit, the emotional fluctuations while holding a position, and the execution of stop-losses. If you experience these with small amounts, you can mitigate the agitation when you increase your share size.
Observing missed opportunities afterward
There is also a way to ensure that missed opportunities are not wasted. It is to observe the subsequent price movements of the situations you passed on.
How did the situation you passed on because it didn’t meet your criteria actually turn out? What happened in the situation that met your criteria but you passed on because of fear? Whether the result went up or down, there is no inherent good or bad in the outcome itself. What you want to see is how your criteria functioned in that situation.
If you continue to observe, you will start to see your habits in passing on trades. For example, you might find you cannot enter during certain times of the day, or you always shy away from stocks that are surging. Once you understand your habits, you can develop countermeasures.
It is okay to have days you can enter and days you cannot
Finally, I would like you not to blame yourself too much for the fact that there are days when you cannot enter a trade.
The goal of day trading is not to enter every single day. On days when conditions are not met, the choice not to enter is the correct one. What is important is being able to explain to yourself why you did not enter. A pass that you can justify by saying ‘it didn’t meet my criteria’ has a different meaning than a pass that you can only explain by saying ‘I was just feeling scared,’ even if both are passes.
The pain of not being able to enter becomes stronger when your criteria are vague. If it is clear what conditions must be met to enter, you will have fewer moments of hesitation. Refining your criteria will, in the end, alleviate the pain of not being able to enter.
Summary
The ‘fear of entering’ felt when you first start day trading is a natural reaction to trying to avoid losses. However, if you keep passing on trades, you won’t gain experience, and regret can lead to impatience, which may result in impulsive ‘chasing’ of trades.
Think of the reasons for not entering as two types: passing because it doesn’t meet criteria, and passing due to emotion. Break down your fear into numbers, and reduce your share size to gain experience. Observe the situations you passed on afterward to learn your own habits. As your criteria become clearer, the pain of not being able to enter will subside.
Note: This article is intended for general information and sharing perspectives on the market; it does not recommend buying or selling any specific stocks. Please make investment decisions at your own responsibility.
