I can’t stand losing! None of us really can! I don’t think there is a forex trader who sincerely doesn’t hate losing pips. Disappearance of so-much-wanted profits leads to hurt ego, frustration or an empty feeling of a wasted trading day. What are ways to fight the anxiety in forex trading?
It is definitely annoying to look back at your trades, analyze the steps you made and find a better entry. It is frustrating to see the market go on without you after bailing out of trade! It is sad to be left with an empty feeling at the end of the day after making +1 pip (although, hey, that’s still a profit!!). It is outrageous to be at loss.
Psychological differences in people include similarities and differences in the way of thinking, feeling and behaving. Every trader is unique and the magnitude of anxiety varies between individuals.
The key to overcome the anxiety is to understand your own psychological character. The advices you read in books and online are only valuable to you if the advices are coming from an individual with whom you share psychological similarities.
Anxiety is a normal and natural emotional response to a threatening situation. Feeling of nervousness, fear of loss or failure and unease affects every trader at some stage of the forex career. Recognizing the cause of the anxiety during trades doesn’t remove it.
In my experience, familiarity to risk gained with time tends to dull the feeling. Constantly making profits (and I am talking about overall profit at the end of the day/week/month and not one selective trade) should clear up the anxiety and fear as success proves itself with evidence.
Mental and breathing exercises (meditation) can significantly alter your forex trading experience, but just like any other strategy, it takes time to master and, if not taken seriously, can only lead to more distraction and damage!
It is wise to have a plan when fear attack. The basic idea is to anticipate the unwanted emotions – that way it won’t be a big surprise when the rollercoaster begins! Once the feeling is there, make sure you acknowledge it instead of putting it aside. Give this fear attack a name and repeat it out loud. At lastly, have an action plan to deal with emotional experience, for example, stop trading immediately and take a shower!
In most cases considering losses as a business cost works well, however this trick is not an ultimate solution for everyone. You can treat trading as door-to-door sales where:
Trading risk = money spend reaching the destination (aka someone’s house)
Losing pips = losing the traveling cost (mentioned in point 1)
Made pips = made the deal and sold the merchandize!
I have also noticed that many traders, even after finding the strategy that works well tend to spend hours searching for other strategies. “The grass looks greener on the other side”, remember? All strategies seem appealing at the first glance. Just keep in mind that every forex trader has a different perspectives and ambitions from forex market, different financial situation and risk management, different emotional behavior and psychological character. Honestly, there is very little usefulness in taking other people strategies. The best strategy is the one you build for yourself.
A Simple Strategy For How To Feel More Confident
Struggling with your self-confidence? You’re not alone! When many of my clients come to me, they too are wondering how to feel more confident.
Increasing your confidence is SO important because it affects so many areas of your life.
One of the biggest symptoms of lacking confidence is having difficulty making decisions.
Many of my clients who struggle with confidence and decision-making end up in what I like to call the “I don’t know” zone.
You find yourself in that awful place where you’re constantly telling yourself you “don’t know”.
You tell yourself “I don’t know where to go”, “I don’t know what’s next”, “I don’t know if I should quit my job” or “I don’t know if I should stay in this relationship”. Essentially, you keep telling yourself – I don’t know what’s good for me.
Confidence is very much linked to the ability to trust yourself, and the ability to have your own back.
I want you to know – it’s 100% okay if you’re not there yet. If you’re still indecisive and doubting yourself, you can absolutely up your confidence level. And the good news is, I’m going to be sharing with you a simple strategy that is totally not scary – pinky promise (baby steps!).
One thing to note before we dive in: confidence is NOT a personality trait linked to being introverted or extroverted. So if you’ve been reading along thinking, “But Emma, I’m just a quiet person! I’m not loud and confident – I don’t command attention” – that is not what this is about. In fact, some of the most confident people I know are actually introverts. No matter your personality type, confidence can be learned.
How To Feel More Confident With The Confidence Loop
To help you increase your self-confidence, I want to explore a concept I call the confidence loop.
There are five different stages and I’m going to talk through each one.
At the top of the loop, we start with a TINY bit of confidence, just to get the process going. I like to refer to this phase as “turning on the generator”.
Turning on the generator is when you decide you’re ready to make a change. You’ve decided it’s time to take that next step and ACTIVATE!
Make Decisions Once we’ve mustered that little bit of confidence, we’re able to make a decision! This gets you out of the “I don’t know” stage we discussed above.
Making decisions is always a 2-step process. First, you make the decision itself, but then you need to DECIDE it’s the right decision for you – this is where you actually commit to your decision.
You decide you’re going to do this thing, even if it gets tough or you’re tempted to back out! You commit to the result that this decision will help you achieve.
The next stage is a mindset shift. This is the part where you’ve already trusted yourself enough to commit and make the decision. But now, your mind needs to make the shift itself!
Trial and Error Learning Theory
Edward Lee Thorndike (1874 – 1949), an American psychologist postulated that learning takes place by trial and errors. He observed that learners can choose correct responses out of a large sample of possible responses and connect them with an appropriate stimulus. From his theory, several learning outcomes are evident.
- Motive or drive – Where there is drive or motive, there is learning. Having the drive to learn a skill will build your confidence and competencies.
- Stimulus or goal – Action (stimulus) will lead to the eventual goal of achieving confidence
- Responses – The responses, which lead to your eventual goal (confidence), can be either satisfying or unsatisfying. We just have to learn to ‘survive’ and learn from the unsatisfying outcomes.
- Chance of success – Through random trials and errors, actions can lead to success in achieving skills, confidence and competency
- Selection of proper movement – Gradually, as you try, you gain skills and competency and achieve success through such movements
- Fixation – Eventually, you learn the proper way of achieving success (confidence) by eliminating the incorrect responses and fixating your efforts on only the right responses. This way, you become confident and fearless in achieving your dreams.
The understanding of forex market reviews and reasons behind making each trade is crucial in forex trading. There are no quick fixes or one-week super rich schemes. In my experience one way to fight the fear is to trade demo account for couple of months. The agenda behind this is to be confident and comfortable with your own plan with a clear entry/exit. Decide on your steps, keep the journal and stand by it! With a method that works, the confidence will grow.
Confidence and competence are not just two sides of the performance coin. They are more like the heart and lungs that share a codependent correlation.
Ultimately, the confidence and competence loop allows us to experience more success with each accomplishment. Competence develops with repetition and success. With repeated success comes a sense of certainty in one’s abilities.
The ability to overcome anxiety and fear is in your own hands and can be done via discipline, a set of very clear rules, ability to learn without seeking shortcuts and daily psychological exercises. The knowledge of forex trading is ultimately transformed into action which leads to experience and therefore even better understanding. Once you earn new experience, the confidence increases. And here is the ultimate loop of success in forex!