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.
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.
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!
