As we discussed many types, psychology plans a crucial role in trading. Even the best strategy in the world, can be screwed by emotional decisions.
In this educational articles, we will discuss 5 common fears in trading and the ways to overcome them.
1️⃣Fear of the Unknown.
Lack of experience make many traders face "unusual" situations on the market: the setups, patterns, fluctuations and formation that they have never seen before. Such events cause inaction and paralyze. Not knowing how to deal with such situations, newbies make irrational decisions that most of the time incur losses.
The best way to beat the fear of the unknown is to keep learning:
reading the books, watching the charts, studying the historical data will help you to be prepared for various situations.
Also, your mindset plays an important role here: your adaptability, your willingness to accept the changing nature of the market are essential for your success in trading.
2️⃣Fear of Being Wrong.
Testing multiple strategies and trading techniques, the only way for the newbie traders to prove their efficiency is to try them, try them on real market. And of course, the majority of the stuff that you will try won't work. In trading, each mistake costs money, hence, losses will be inevitable.
The fear to make a mistake will be chasing you.
The best way to overcome the fear of being wrong is to build a confidence in your actions. After trying multiple strategies, you will certainly find the one that works. More you will trade with that, more winning trades you will catch, more confident you will become in your system.
3️⃣FOMO - Fear of Missing Out
There are thousands of instruments to trade. Many markets are opened 24 hours a day. Of course, you can not monitor them all, and even if you have a fixed watch list of the instruments that you trade, you can not monitor them 24/7.
Some opportunities will always be missed. Some trading setups will form while you are sleeping, and accurate patterns will form on the instruments that are not in your watch list.
Realizing the fact, that something will always be missed, is painful.
For that reason, newbie traders are trying to be present everywhere at anytime. But the paradox is that more options breed more confusion.
Always remember the fact that patience always pays.
Opportunities will always come, but in order to catch them, you need focus. And fewer instruments you have in your watch list, more attention you pay to them.
4️⃣Fear of Losing Money
The biggest risk in trading is the fact that your entire trading account can be blown in a glimpse of an eye.
Moreover, trading can be learned only by trading. And losses are inevitable, no matter how good you are.
That makes newbie traders be scared of opening just one single position.
I always give my students the recommendation to trade with the amount that they can afford themselves to lose.
Consider your trading account as an investment. With each single trade, you are investing in your skills, in your knowledge. You pay the market to teach you.
5️⃣Fear of Not Taking Profit at the Right Time
Imagine you opened a trade and the market suddenly starts moving in the direction that you expected. It is coming closer and closer to your target... A few seconds after, however, the market rolls over. You see how your profits start evaporation. Probably you chose incorrect take profit level? Maybe it is the moment to close the trade manually?
You are scared that all the profits will be gone.
Take profit level selection is a very hard element of each trading strategy. The only way to not let your emotions intervene is to build the solid system that proved its efficiency and learn to be disciplined to follow that no matter what.
Always remember that no one can teach you how to deal with yourself. How to deal with your emotions.
You should go through all these fears by your own and find the way to beat these dragons.
The solutions that I shared helped me to beat my dragons, I hope that they will help you to beat yours!