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? I bring this up because I’ve noticed that many trading fears can easily become overblown as well. It is part of our natural, human instinct to fear what is unknown and/or uncertain. Being mindful about our known trading fears can help alleviate a great deal of unnecessary worry.
How to be a more relaxed trader
Overcome trading fears
Increase your profit
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. Fuelled by their fear of “missing out,” they become susceptible to bending or breaking the rules. This leads to them chasing overhyped or non-qualifying trades.
Being influenced by fear of missing out can be a costly trading habit. It promotes overtrading, skews performance results. Finally it 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 technical analysis traders, the thought of being “wrong” about a trade idea or set-up is a tough one to bear. 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. This could even apply to very-high-quality ones at the moment of execution!
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. Remember learning to trade takes time. You will loose money, you will make mistakes, but see these as a positive, instead of something to fear. By learning from mistakes you will also develop rules to follow and a successful trading strategy.
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