In trading, this fear harms your choice making. When not managed, it can cost you a load of money.
It is natural to have an emotional accessory to money, and regular to fear losing it.
Trading fear is one of the most typical reasons for inconsistency in traders PNL.
Fear will manifest itself in 4 ways in your trading:
Fear of losing money
Fear of being wrong
Fear of losing out
Worry of a winner developing into a loser
We talked in the previous about the 4 causes of all trading mistakes. Today we are going to discuss how you can overcome these fears and eliminate them from your trading.
Here are 3 methods to overcome these types of fears:
When you trade is uncertainty, a huge cause of your fear. Uncertainty is unavoidable in trading, however it can be reduced by planning each trade THOROUGHLY before you get in. Before every trade you take, you need to understand the following:
Everything is already planned, and you are simply carrying out once you get in the stock. The trade either works, or it does not. Simpleness eliminates fear of trading.
You understand what you need to be doing in any given market scenario when you know all of the answers to these questions going into a trade. Once you enter, this will take a lot of the thinking and stress and anxiety out of a trade.
2. Trade Smaller
Due to the fact that you are not trading money you are mentally connected too, Trading smaller sized will help remove your fear in your trading. You wish to be trading large enough size that makes the time you put into the trade worthwhile, however little enough that you do not feel emotional if it is lost.
Oversizing is among the primary reasons for your fear of losing cash and poor trading decisions in general. When you are extra-large, you are trading cash that you are mentally connected to.
And this attachment will trigger you to panic sell when the stock makes a little relocation against your position, sell too early, and fail to stop out of your positions when you are supposed to. Effective trading is the result of being able to take a look at markets objectively.
3. Concentrate on What You Can Control
In trading, there are a lot of things outside of your control. You can not get sidetracked by these “uncontrolables”, and let them affect your decision making:
Accept what you can manage in your trading. This is a video game of probabilities. Trading with an edge. An effective trader is like a casino.
There will be rounds of slots they do not make cash. If you focus on sticking to a tested process, the PNL will follow, and your fear will not affect your choice making.
4. Tracking Your Trade Metrics
You will always have worry in your trading if you are not trading a proven method you know with analytical certainty will make you cash in the long run. You do not know for certain a strategy or setup will work for you up until you track it, and you earn money after 30 times (or more) you take the setup. Discover more about how to track your trades correctly in this post here.
A big issue numerous losing traders have is that they are not tracking their metrics. They are frequently trading a setup that somebody else performs beneficially, but they have no idea if it works for them also.
There are thousands of tested techniques out there, but you dont know if you can execute it profitably till you take trades and track them.
Live Trading Boot Camp Starting This Weekend (4 Seats Left).
Here is an example of a setup I utilize that does not work for everybody: One of my go-to-setups that accounts for most of my annual PNL are profits breakdowns. I have a 70% win rate on this setup and understand with certainty that if I take this setup 10 times I will generate income. This strategy works well for me, but I know a lots of traders who can not execute this method successfully.
A huge cause of your worry when you trade is unpredictability. Unpredictability is unavoidable in trading, however it can be reduced by planning each trade THOROUGHLY prior to you go into. Simplicity removes worry of trading.
Accept what you can manage in your trading. If you are not trading a tested method you understand with statistical certainty will make you money in the long run, you will constantly have worry in your trading.
Find out all the day trading strategies weve been utilizing for 2 decades in our Live Stock Trading Bootcamp. Class begins on August 9th, just 4 seats remain open.