Do you know why some traders are more successful than the others? It is because they have conquered their trading fears. Forex trading involves a lot of risks, so the possibility of losing money often instills a sense of fear in traders. 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.
Most traders choke under pressure and lock-in small profits. Say for example, you were holding a long EUR/USD position. You bought it at 1.4220 and the current price is 1.4205, which means you are down by 15 pips. Your stop is at 1.4190, just below the support at 1.4200. At this moment you go under tremendous pressure and start fearing loss of money. The result – you close early. Just after you close the trade you see the price going up and up. You missed a chance of making a big profit!
So, in order to make steady profits you must be able to take risks and for that you need to overcome your trading fears. We will discuss three ways in which you can overcome your trading fears and develop a positive trader’s mindset.
- Get Insights into Your Fear
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.
- Walk Away from the Computer
Most traders enter a trade and then keep staring at the computers looking at the price charts going up and down. There is nothing wrong in it but as soon as the price starts going in a direction opposite to what you expected you start feeling the tension within and end up making illogical decisions.
You can avoid this situation. Analyse the market, enter the trades with enough confidence, set your stop loss and take profit levels and then walk away from your workstation. Do anything you wish to but do not peep on to the computer screen.
- Be Prompt in Your Actions
Once you have entered into Forex trading you need to act really fast. There would be times when you just need to wait and watch and then there would be times when you need to make a quick decision and act promptly. Once the opportunity is gone, you may never get it back or may have to wait for too long. Wait, watch, analyse and hit the mark when the moment arrives. The more you hesitate, the higher will be the chances of loss.
Instead of allowing fear to get on your nerves, use your fears to make better trading decisions. If you succumb to your fears, you will eventually lose a number of profitable opportunities. But, overcoming your trading fears will not only save you from taking wrong decisions and losing money but will also pave the way for a successful trading career.
For novice traders like you, Aristrex delivers world-class assistance that you can trust while exploring the uncharted territories of forex trading. By practising consistently through our demo account, you can gain more experience, become more confident — and hopefully, win over your fears.