Have you ever worked yourself up into a frenzy about something beforehand, only to realize afterwards that the experience wasn’t nearly as scary as you anticipated? Perhaps it was a first date, or playing in a big game, or giving an important presentation at work or in school? Sure, it was daunting in advance, but you may have found you were able to rise above your preconceived fears, perform admirably, and perhaps even have some fun to boot.
Now, I bring this up because I’ve noticed that many trading fears—just like the life- and work-related ones we all have—can easily become overblown as well. And while it’s all part of our natural, human instinct to fear what is unknown and/or uncertain, being mindful about our known trading fears and working to overcome them can help alleviate a great deal of unnecessary worry and apprehension during the trading process.
So in pursuit of more relaxed, confident trading, here are two or three more common trading fears, as well as reasoning for why we often needn’t fear them as much as we do.
The unknown and random nature of every trade outcome means that the trading universe itself is a haven for “What Ifs.” For example, what if a given set-up—which happens not to fulfill all of your requirements for trading—happens to take off and become a runaway winner?
Many traders live in constant fear of this very scenario, so fuelled by their fear of “missing out,” they become susceptible to bending or breaking the rules and chasing overhyped or non-qualifying trades. (Ever say to yourself about a trade in question, “Well, it’s close…and everybody else is taking it” or wonder if “Maybe it’s good enough…”?)
Being influenced by fear of missing out can be a costly trading habit that promotes overtrading, skews performance results, and adds stress and hassle to what would otherwise be a simple and straightforward lifestyle trading regimen.
Bear in mind also that new and inexperienced traders are especially vulnerable since they often fail to identify misplaced trading fears and flawed thinking when they occur. Such happens to be key to staying focused and committed to trading the strategy at hand. So if ever you feel the temptation to break the rules—even “Just this once”—and take a trade when your strategy says otherwise:
Trading Fears: “What if I don’t take the trade and it surges to profit without me on board?”
Solution: Remember that a trader’s job is to precisely execute their strategy, not to follow news- or media-related hype or speculate on trades and trade set-ups. Keep emotion and outside factors out of the decision-making process, stay committed, and trade your strategy for the long term.
As you might expect, most trading fears involve the eventual results of the trade. But not all are about fear of losing money, or even leaving potential profits on the table by not taking a particular trade. Indeed, to some traders, particularly those who tend to live and die with the results of their most recent position, there’s a lot more than just money riding on their trades. What do we mean by that, you wonder?
Well, only some may understand this, but some traders tend to believe that their value and self-worth is hanging in the balance each time they trade. With that, in order to prove their intelligence, skill, and even fitness for being a trader, they need to generate winning trades. How’s that for a pressure-packed trading experience?
To these traders, the thought of being “wrong” about a trade idea or set-up is a tough one to bear, and even worse than losing money is having to admit their perceived failure to themselves and/or others. Their trading fears, though, might cause them to back out of trades—even very-high-quality ones—at the moment of execution because they fear the trade not working out in their favour.
These thought patterns constitute downright self-sabotage, so by all means, if you dread defeat and have a tough time dealing both physically and emotionally with losing trades, you should contact a mentor or trading coach immediately. This thought process might sound a bit like this:
Trading Fears: “I simply can’t handle ANOTHER losing trade like that last one! What are you going to tell people about that? Maybe I should cancel this latest position so I won’t look stupid all over again if it doesn’t work out.”
Solution: Whoa…this is seriously flawed thinking that warrants an equally serious response. Trading isn’t intended to be such an emotional roller coaster, after all. Lifestyle trading, though, has been designed to impart a level of freedom and detachment from the results of your trades, so if it’s intraday or short-term trading that’s got you down, you can always make a switch to higher time frames. But if self-sabotage is a problem with which you’re struggling, get some help with your trading, and for your own sake, don’t delay any further.
So there you have it…some common trading fears and why you ultimately shouldn’t be all that fearful of them in the first place. Watch out for our next article, too, when we’ll examine several factors that truly do stand in the way of consistently successful trading…and if you’re going to be afraid of anything when you trade, these may well be it!