7 Strategies To Overcome Fear When Trading

Has fear invaded your mind and now is setting the tone for your trading?

• The fear of losing money?
• The fear of being wrong?
• The fear of missing out?
• The fear of looking foolish?
• The fear of not being good enough?
• The fear of…? just fill in the blank

Some fear is natural and perhaps even necessary!

A certain level of fear is good, isn’t it? It keeps you from risking too much or from doing something too dangerous.

Fear keeps you from crossing a busy street without looking, because you know you might get hit by a car. Or it keeps you from taking the shortcut down the dark alley late at night, because you might run into trouble.

If you can avoid taking on the risk of crossing the busy street or entering the dark ally, it’s smart and the logical thing to do. After all, why would you want to put yourself in a vulnerable position if you don’t have to? No one in their right mind would, would they?

But what about fear in trading?

Unfortunately, when it comes to trading, fear can hurt you all by itself.
Again, some fear is alright. It keeps you from recklessly blowing out your account or from jumping in front of the news bus. Some fear is good and should keep you and your account safe.

The problem is when fear becomes this ever present “thing” in your trading. That’s a different story altogether.

• This fear might keep you from making sound trading decisions, choosing good entries, setting stops and exits, pulling the trigger or getting out of a trade when part of you know you should.
• This fear might cause you to ignore your trading rules even though you have them to keep your trading safe.
• It may cause you to take repeated losses and feel down about it.
• Fear may also take a toll on your physical health… feeling anxious and losing sleep.
• Worst case scenario it’ll cause you to blow out your account or it will lead to your stopping trading altogether.

When this happens, our fear, often fueled by previous negative experiences, has become part of our “frame of reference”. We have learned to draw on these bad experiences to evaluate and respond to current events.

This could happen with just one bad experience or it could take a series of experiences before a negative association is forged.

Rather than evaluating each and every single trade for the unique event it is, the fear based trader responds by falling back on the negative previous experiences.

Of course, to some degree we all do this. After all, that’s how we learn, change and improve.

That’s how you and I learned to walk, run, eat, talk… that’s how we learn. We experience and improve based on what has worked or not worked for us in the past.

The problem: when we get stuck in certain experiences and can’t figure out how to move forward, to continue to learn and develop.

If this is a problem for you, how can you overcome fear in your trading?

Here are 7 strategies to help you overcome this obstacle so you can move forward with your trading.

1. Learn to accept risk. Trading inherently carries risk there is no question about it. To become a successful trader you must be able to accept the fact that trading, by its very nature, carries some risk. You don’t have to like this fact but you must be able to accept it to some degree.
2. Get comfortable with losing money. Once I heard a quote, unfortunately I can’t recall the exact words nor who said it. It was along the lines of: “Losing is like breathing, just get used to it”. This is so true, isn’t it? Learn to accept and get comfortable that you will lose money in your trading.
3. Clearly define your trading approach. Do you have a clear trading strategy? Are you confident in your strategy? Do you have the confidence to follow your strategy? If you lack a clear strategy, a clear trading approach, it will be very difficult (if not impossible) to gain confidence in what you’re doing, which will lead to more fear.
4. Manage your risk; manage the part of trading you have control over. Risk only a small percentage of your trading capital on any one trade – always. If you have a string of losing trades in a row you’ll be able to keep trading and won’t get washed out. Most things are out of your control when trading, so be sure to manage the things you can control!
5. Manage your trades. Start out by trading smaller positions and manage those once you’re in the trade. Know where to enter, where your stop will go and where your target is… BEFORE you place your trade. And always, always use a stop when placing your trade.
6. Take responsibility for everything in your life and that includes trading. You are responsible for what happens or doesn’t happen in your life and trading. Sometimes that’s a hard pill to swallow, but once done, things can only improve from there on.
7. Reprogram your mind… learn to run your own brain. Here is what I mean by that. We all have thousands of thoughts run through our brains all day long. Most of those thoughts don’t serve us, but hurt us. Over the years we accumulate too much negativity and it can be tough to get away from that. Make sure you feed your mind, your brain positive thoughts. Choose thoughts that will support and nourish you rather than bring you down.

You can do this via affirmations you create for yourself or you can listen to MindZoom, professionally recorded affirmations designed to refocus your mind.

To your success!

To life and trading free from fear!