Strive for excellence, build confidence and increase efficiency by conquering your trading fears. To catch all the opportunities in the forex market, you must keep a clear mind and set aside feelings of doubt or stress. When entering a new market or trying a different strategy, it is a natural reaction to experience trading fears. The most important thing to remember is to learn how to manage these fears and use them to your advantage. Whether this is fear of failure or change, overcoming fears when trading can pave the way for constant growth and success.
Learn about fear
Fear is a innate human reaction. Oftentimes, it can lead to unwanted emotions and a feeling of hesitation to move forward. During personal and professional matters, fear can either be a crippling emotion or an advantageous source of inspiration. When managed correctly, fear can actually strengthen drive for self-improvement, system optimization and creative problem solving. To efficiently take action and control your fears, learn How To Manage Emotions When Trading.
Though fear is immediately associated with negativity, it is important to remember that it can greatly boost motivation and perseverance. Here are the main points you should know about fear:
- Fear does not mean weakness or lack of confidence. It may signal doubt in your strategy or timing. Before letting fear hinder you from performing well, double check your system and action plan if you need further improvement.
- Being fearful is healthy because it stimulates the brain to think, strategize and respond.
- Innate fear can be driven or caused by many things. It can be from past experiences or chronic anxiety about certain situations. It is important to first analyse what you are fearful of and learn how to manage it.
- Constant fear does not only affect psychological state but also physical wellbeing. If fear remains uncontrolled, it can lead to physical strains like fatigue, insomnia or migraines which can ultimately affect trading performance.
- The feeling of fear incites action. Fear should not paralyze you. Yet, this is a chance for you to take action especially if great rewards are at stake.
- Fear is a source of strength. Successful figures in human history go through great adversities. To create the best version of yourself, it is important to remember that emotions like fear can actually lead you to success.
Different types of fears to watch out for
Trading fears come in many forms and influences. From childhood fears to anxieties when performing at work, a person’s source of fear can originate because of many reasons. Before facing your fears, it is essential to determine what you are afraid of. Learn the different types of fear you may encounter when trading and how to manage them:
Fear of the unknown
There are no perfect trading tools or strategies that allow you to exactly see the results of your trade. In a changeable market, much of the decisions come from analysis, research and experience. Because of this, the nervousness before trading or from an open trade is a common emotion. When faced with an unfamiliar situation, do not let fear of the unknown prevent you from making the right decisions. Make use of analytical skills to decide the best course of action.
In forex trading, the best way to minimize the fear of the unknown is to boost your analytical skills. Analytical skills are important when trading forex. Through powerful analytical thinking, traders can use data and facts to help reach a conclusion and determine the best approach for different trading situations.
Fear of change
When people find extreme comfort in routine or habit, it is easy to become fearful of change. When trading forex, traders must constantly evolve with technology and strategy. Oftentimes, fear of change may limit growth and willingness to test other markets or new tools. Instead of feeling doubtful about change, learn to embrace possibilities and be open to new experiences.
According to Sciencemag.com, learning how to deal with change and accepting discomfort will open you up to new situations that could lead to unexpected results. Here are simple things you can do outside of trading to help you feel more comfortable with change:
- Check your expectations and make sure you are already embracing change from the beginning.
- Confront your worries and uncertainties and note them down.
- Find solutions to the causes of your hesitation towards change.
- Develop the right attitude towards learning new things.
- Increase your confidence amidst change by improving your skills.
- Keep stress at bay so you can handle any sudden change with structure rather than tension.
Fear of taking risks
Much like fear of change, fear of taking risks also involves comfort in stability and routine. When you take risks, you expose yourself to challenges or setbacks. In forex trading, monetary risks are usually involved with decision making. In a market full of possibilities, traders are constantly exposed to the different risks and opportunities for success. Those who are comfortable with risks can explore both possibilities and solutions for any type of obstacle they may face.
Taking risks is a significant part of being a forex trader. It encourages you to optimize performance and strengthen skills in every new undertaking. The most vital part of managing risks when trading is to make proper calculations and preparations. In the end, this will help you become a more proficient and effective trader.
Fear of failure
Most people who embark in forex trading have heard of its rewards. Because of this, the expectations for success and profit is high. When traders are ready with the right strategy and experience, the fear of failure may sink in. Most of the time, traders view failure as final and irreparable. On the contrary, losses or setbacks are actually the starting point for success and development. It provides the opportunity to learn and evaluate mistakes of past trades.
Fear of failure is another common emotion felt by both novice and expert traders. It provokes feelings of self-doubt and nervousness that may hinder optimal performance. To ensure that fear of failure becomes a positive emotion, check out the top proven strategies to conquer fear of failure on Forbes.
Simple and smart ways to face your biggest fears
Everyone experiences a sense of fear when trading the forex. With an active market, it is inevitable for forex traders to feel overwhelmed or worried. Despite feelings of fear or doubt, successful traders are able to thrive and boost performance. Get to know the top 3 methods you can easily use to face your trading fears and stay determined throughout any challenge:
Do you find yourself avoiding new challenges or tasks out of fear? Are you constantly hesitant to do something different or set a new path? To open yourself up to unfamiliar experiences and possibilities, try the fear-setting exercise. Developed by technology adviser and best-selling author Tim Ferris, the fear-setting exercise is an alternative to goal-setting. Instead of pointing out your goals and how to reach them, Tim created fear-setting as another way to prevent and prepare for the things that worry you. It allows you to think about how to prepare for the “what ifs’ and other different scenarios that concern you.
To learn more about the fear-setting exercise, get to know Tim’s point of view in his TED talk.
Optimal decision making
Being fearful involves feeling uncertain and reluctant about how to approach the situation. When trading forex, it is vital to optimize decision making to achieve target goals. By managing your fears and making the best decisions, you are setting the right path for yourself in every trading scenario. In the long run, becoming more decisive can minimize trading fears and improve the results of your trade.
When in the middle of a trade, it is normal to feel a sense of anxiety or pressure to achieve a winning trade. To conquer your trading fears, be sure to practice and refine your decision making skills. Here are best practices that boost decision making and exercise the mind to make the right choices:
- Practice the classic pros-versus-cons or apply cost-benefit analysis before finalizing a decision.
- To make better decisions, traders must prepare the best strategy and envision the right choices to make with the possible scenarios in mind.
- Prepare your mindset to face any challenge and better control innate reactions. Learn the 6 Inevitable Emotions of Forex Trading and get ready with an action plan.
- Gather all the data you could possibly need to help you make a well-informed decision.
- Avoid making decisions out of greed or other disruptive emotions. Let your thought process revolve around facts.
- Lastly, you can also seek support or reach out to experts. This will not only help you boost your decision making skills, but it will also help you to become better at facing your trading fears.
If you fear change or risks when trading, the best way to test any new strategy and gain confidence is through a demo account. A demo account is a reliable method of testing new tools or applying different ideas without risking real capital yet. It allows you to prepare for different outcomes and plan for any underlying risks. Once you are able to create a reliable strategy, you will be able to lessen any apprehensions you may have. Practicing on a demo account also gives traders the opportunity to feel self-assured and confident in their personal performance.
Accept the scenario and take control of your trading fears
“I learned that courage was not the absence of fear, but the triumph over it. The brave man is not he who does not feel afraid, but he who conquers that fear.” — Nelson Mandela
There are many benefits to becoming comfortable with fear and properly managing them for optimal performance and success. When overcoming your worries, the best thing to remember is that fear is a natural emotional state that encourages you to succeed. In human history, ingenuity and triumphs were greatly driven by overcoming fears. With this in mind, develop a way of thinking that embraces challenges with a growth-driven mindset.
Trading fear is a mental obstacle that can yield many rewards. With many aspects of trading to keep an eye on, overcoming your trading fears will lead to constant optimization. To create an enjoyable and profitable forex trading career, be sure to nurture a mindset that is fearless, confident and diligent.