Controlling emotions and overcoming fear is probably the most difficult task a forex trader has to accomplish. Fear could often paralyze you into a state where you experience an unsteady thought process and probably end up taking some of your worst trading decisions. When you let fear overcome you, forex trading turns into a nightmare. Fear can manifest itself in many ways with the most common situation being when a trader is fearful of losing money and any potential profits. Fear is probably the most significant emotion for traders. Many traders struggle with this emotion and fear can demobilize you from applying your hard-learned technical skills.
Experiencing fear is normal, and in some cases even good because it helps you assess the risks and respond appropriately. However, you must not allow your fears to take a toll on your trading outcomes. In order to conquer your fears, you first need to determine what you are afraid of. In most cases, people are afraid of losing money because they have too little knowledge of the market or the trading system. Therefore, gain a better understanding of the market and come up with a trading plan that suits your goals. Gaining knowledge about the market will also help you distinguish between high and low-risk trades, so you will be in a better position to minimize the risk factors.
Fear is not always our best friend when it comes to trading. Successful traders are always in control of their emotions, allowing them to keep fear at bay. Others might allow themselves to be controlled by fear without even knowing it, causing anxiety and indecision to ruin their trading potential. Executing, holding and exiting trades become a complete nightmare! Successful traders take advantage of the adrenalin rush, using the increasing concentration and awareness when entering trades. Unfortunately, the inexperienced trader lets the adrenalin rush get the best him, leading to stupid mistakes caused by impaired judgment.
As some of you may have already experienced, after significant losses, our trading psychology can get in the way of trading, even if we have improved our technical trading edge. Many traders stop trading and never return. Others work hard to understand and correct the flaws in their technical game, only to find that none of the techniques they learned would help them overcome fear. To be successful, traders need to manage both the technical game and the emotional side of trading. Forex is about overcoming your fears, as simply as it is, and sometimes it requires bold decisions. The one who’s never mistaken is the one who never did anything – so give yourself some credit. The market can be quite an unexplored area for you yet, but it only means you have so much more to discover ahead of you!
As a forex trader, you must move from a fearful mindset to a mental state of confidence. You have to believe in your ability to execute every trade, regardless of the current market sentiment. Too many investors have an "all-or-nothing" mentality. They are either going to get rich quick or blow out trying. You want to take the opposite mentality: one that signals that you are in this for the long haul. As you focus on the execution of your trading strategy, while managing fear, you realize that giving up is the only way you can truly lose. You will win as you conquer your fears, gain confidence in your trading strategy, and over time, become a successful trader.
