By Rob Colville on January 20, 2018 in
Don’t be afraid of trading. You may automatically tell us you’re not, but it’s okay; many people are. And it makes sense to be. Fear happens when adrenaline floods our bodies, sending us into fight or flight mode. Fear helps to save us from potentially dangerous situations. So all traders will feel some element of fear – it’s to do with the unpredictable nature of how trading works. Losses (and wins) can be life-changing.
However, despite this, it’s best – if possible – not to be afraid of trading. Although fear is a survival mechanism, it’s not always the best thing for us. It can make us doubt ourselves and second-guess our trading strategies. It can make us worry when there is nothing to worry about. Worse, it can make us kill a great trade just because we’re unsure. Judgement is impaired, knowledge is clouded. All in all, fear when it comes to trading is a terrible thing.
Unless we can harness it. Use it somehow to make our trading better. So although we suggest that you not be afraid of trading, we need you to understand where the fear comes from and what it relates to before you can step away from it and trade successfully.
No one likes to lose, but losing time and again can cause a major fear to attach itself to all your trades, making you wonder if you’ll ever win again. A strange kind of superstition creeps over you, even though you know it doesn’t make sense for it to happen, and you become paralysed. It’s impossible to go any further. Or you’ll constantly put trades on, only to stop them before they have a chance to go anyway because you’ve convinced yourself you’re going to lose.
You need to shift your focus so that you’re not afraid of trading anymore. Small losses are all part of trading and should be expected from time to time. They’re nothing to be afraid of – they just happen. Big losses, of course, could be a problem, but they can be avoided for the most part by not going overboard with your trading account. It’s the small losses that are just stepping stones to bigger wins, that you should almost ignore as you keep moving forward.
If you’re afraid of losing, you’re focusing far too much on the results instead of simply following your plan and moving steadily onwards. Losses are part of the journey. To combat the fear of losing you need to look ahead, not back. And only trade with small amounts so that when you do lose (because you will on occasion) it’s nothing too catastrophic.
Another aspect of being afraid of trading is worrying that you’re going to miss out on great trades. This is an issue because it can lead to traders throwing their money away on unsuitable trades, simply to ‘keep their hand in’. The idea of not trading on anything for a few days, even weeks, is an uncomfortable one. Yet it’s something that often has to be done; it’s what a good trader will be happy to do. It’s can be tempting, though. Just one more trade, just a few more pounds, just in case… but that way madness (and loss) lies. You’ll be overtrading before you realise what’s happening.
Don’t be afraid of trading, and don’t think about how much you’re trading. The quantity is not what’s important; it’s all about the quality.
Ego. It’s a big issue, isn’t it? It stops us from doing things that are correct because we don’t want to look a fool. In trading, though, you can either be perfect and never make a mistake, or you can make money. The two don’t work together; if you’re never making a mistake, you’re not taking calculated risks, and if you’re not taking calculated risks… you’re not winning. So don’t be afraid of trading – you need to trade if you want to make a profit. Don’t let your fear of failure stop you from succeeding.