Most forex teachers, educators and marketers say, “One of the reasons why forex traders lose in the forex market is because of fear“. Which may be either that of the unknown or the fear of losing your trading capital.
While they tell you one of the causes of your failures in the forex market, they do not exactly tell you “how” you can overcome it.
In today’s this article, I will disclose to you “how I overcame the fear of losing in forex trading” I believe you should also read about Anxiety in Forex Trading and How to Overcome it.
Before we proceed, let us understand what fear is?
What is fear?
According to psychology today, “fear is an emotional response induced by a perceived threat, which causes a change in brain and organ function, as well as in behavior. Fear can lead us to hide, to run away, or to freeze in our shoes. Fear may arise from a confrontation or from avoiding a threat, or it may come in the form of a discovery”
I still went further to Indian Express and I saw this, which got my attention “However it must be noted that the only way to get rid of fear is to confront it head-on. If we run away from it or freeze during fearful situation, we are acknowledging that fear is more powerful than us”
From both explanations above, we have known a bit about fear. Fear is an emotion, same with greed that cloud our judgement and make us act like cowards but the major question is “how does it affect our trading performance”.
Fear in forex trading?
Does this mean the forex market has the ability to smell and sense fear? No, definitely not. The forex market is volatile, that means it moves ups and down rapidly and that happens to be “the origin of fear in forex market”.
Let me explain to you,
Trading the forex market requires money, when we trade in this volatile market, we are supposed to win some money and lose some money. However the FEAR manifest when we loss more money than we make as profit, which will result to a gradual loss of account.
“This is the case with some forex traders who go about yelling that “forex is a swindle” this is because they have become afraid to trade or even to try again because of a loss or two and as such they look for innocent trader who they will inject this fear into”.
How many times have you place a trade only to make a loss. Imagine having these “losses” for 3 consecutive times, this will immediately weaken your self-esteem and cause fear for the forex market and that fear can lead us “to hide, to run away, or to freeze in our shoes” or go online yelling “forex is a fraud”.
Ways How I Overcame Fear While Trading.
Understand that this article is not about eradicating “fear” as a whole – which is not possible. But how to reduce it (fear) when trading so that it doesn’t influences you’re trading result negatively.
I will show you steps, which I used to keep my fear in check; these steps should at least also open your eyes to the reality behind FOREX TRADING.
Step 1: Identify The Source Of Your Fear:
Knowing what trigger your fear is the first step in overcoming it. Every trader has a thing or two which make them become emotional while trading and you need to identify it, if you want to really conquer it.
It could be a certain number of losing trades, having your stop loss hit, a trade going against your desired direction, entering a trade late or early etc. The list goes on, it could take you weeks or months to discover it and when you do go to step two.
Step 2: Outline Your Fears:
Once you have identify them, you need to thoroughly write them down, let us take for example, you are afraid of “having your stop loss hit”, you need to sincerely write it down on your trading journey.
This will serve as a reminder to you whenever you trade and will give you the confident to face it, whenever you come across them.
Step 3: Evaluate Them:
When I say evaluate I mean, “to draw conclusion” from what you have outline in your trading journal. You need now decide whether the fear you have in the forex market affects just you or more traders by evaluating it.
Let me give an example using “stop loss getting hit”. when your stop loss gets hit you automatically get annoyed and when trade moves in your favour you become afraid (fear) of placing another trade and getting stop out again. This doesn’t just happen to just one individual but to a lot more traders.
Nevertheless, in a scenario where a trader becomes afraid (fear) of entering a particular pair, because you saw a trade opportunity late. This will be an individual fear that might only happen to you at that period of time or to a hand full of traders that trade that pair still at that same time since the forex market has unlimited opportunities.
Step 3: SOLUTIONS:
Note that, NO BODY will release you from your fear EXCEPT YOU, which is why you need to do the steps above and then face it head on. Below are some of the things you need to put into consideration when liberating yourself from “fear of losing in forex trading”
- Understand that NO CAN see the future we can only guess at it base on probability.
- Note that, there other participant in this financial market, individuals and cooperate with much larger capital than you, I suggest you read Who Are The Participant In The Forex Market.
- When you place your trade, it will be in loss for the first time this is because of the spread and other External Barriers In The Forex Market.
- The price of currencies can move in any direction, either in your proposed direction or against you.
CHECK OUT: Why Trade Forex
There is lot of reasons I could give, to show forex traders why they should not waste their energy being afraid of losing.
Fear is part of human nature and totally eradicating it means you are ready to die (just imagine living a life with no emotions). You can control it (fear) by meditating or always other reading people’s personal experience about trading and most importantly you should always tell yourself the truth irrespective of the outcome of the forex market.
The steps I just outline above is what I use to counter my fear in the forex market, I simply identify it, outline and evaluate and find possible solutions.
Trading without fear is possible; I would love to hear from you. Did this article help you to put your fear of losing in forex trading in check and do comment below of what you are afraid of in trading the forex market.