Recently I’ve had a few trades that go negative as soon as I place them and within hours I’m down 80 pips or so. My stop has not been hit but at this point I’m thinking it’s only a matter of time. Incredibly the trade reverses and comes all the way back down to break even… Now I’m thinking I should just pull the trade and accept break even for fear that it will go back to -80 or something and end up hitting my stop loss.
So I pull the trade and it just presses on upwards to 40, 50, 60 pips. Now I’m thinking damn, I should have just left the trade.
But how do you get over this fear? When you see a trade claw it’s way back from almost losing it’s incredibly tempting to close the trade at break even because you can’t bare to see it lose again lol.
Fear is the result of unpreparedness. If we are prepared am sure we can combat the fear. Thus, for all traders it is very much essential that they make up their mindset and trade with strong justification so that they can withstand the profits or losses.
I think that you will have to set down with yourself and ask yourself what you’re afraid. Losing money? It’s different trading on demo account as on real account, because of our emotions. Demo account is good for testing yourself for your strategy, money management, analysis and indicators which you are using for trading. You can’t use them all. And you can’t use all analysis which is known and you read about it. You have to set up your best analysis system which works for you and you can practice it on demo account. Then when you are ready with that, you switch to real account and then you have to deal with yourself. It’s not easy to lose your money, for which you were working for. When you go to real, you have to stick up with system which was working fine for you on demo account.
I was there too, you know. I am now in Forex for around 6 year and read a lot of books. At the beginning I have lost two real accounts with my savings. This was not so encouraging. I had a system, knowledge, but my emotions let me down. Then I saw that “my system” freezes when I was going to the market and I was making so stupid entries which were not in my system. Everything was upside down. Reason for that: I was afraid of losing my own money. We underestimate our own emotions, which operates behind (or in) us. I am perfectionist in my nature, so losing … that was not in my repertoire. When I accepted that I can lose too and I will lose some amount, I picked up. Now I just follow my rules and am making decent profit. I know when I enter, where I go out and how much lose I am accepting with specific trade. If you know at the beginning how much lose will you have if you have miscalculated and you accept that, I think you will be just fine.
This is a common problem, to which the root cause can be very different from trader to trader.
All good answers so far, except for one was missed.
Experience.
This problem boils down to whether or not you’ve “been there before”.
Here’s my advice, if you haven’t already, start journaling each trade you make with a good amount of detail- before, during and after. Chances are, you’ll figure out on your own what the problem is after you see the pattern in your journal entries- it’s the only way you’ll get better on your own (i.e. w/o a mentor).
I’d bet, your simply entering the trade to early on a less-than-ideal signal, w/ some underlying worry that if you “don’t get in now” you’ll miss the opportunity.
Fear is the direct result of unpreparedness. Thus we need to prepare our mindset strongly such that sustaining in the forex market is possible and those who sustain in this business for long will certainly be able to make good gains. Consistency is the key to success. Be prepared to face the battle of emotions and win over it.
1.- It is very common in the trading world to be enormously more patient with your losers than with your winners (or even trades) This is one of the emotional obstacles that we face and something that needs to be dealt with.
2.- It might pay off to review your system, indeed, as Jake suggested. Or perhaps your discipline following it.
3.- I’d like to ask you how well you understand market flow. If you don’t understand it properly you won’t be able to make the right decisions at the critical points.
4 .- If you’re making the wrong decisions out of fear, try reducing your position size, maybe you’re risking more than you’re actually comfortable with and that could cloud your judgement.
I only learned to overcome that fear - and I still don’t always succeed - as I accumulated more and more trading experience. You just get numb to it in the end. Most of the time.
The other approach is to trade with a lot small enough that the loss wouldn’t hurt you too much, thus allowing you to be more patient with it. But that also means accepting that your profit wouldn’t be very large either.
We have to clearly anticipate the moves in the Forex markets and this is why we have to know which is a good time for doing our trades and how we are going to get our trading income …
An African proverb says, if you are looking for the eyes of a fish, go to the head. What is the point? For you to be able to overcome your fears, you need to start out by understanding what you’re afraid of. Again, develop a personalized rules-based trading system.
Start out by understanding what you’re afraid of. Gaining a better understanding of your fears will help you establish a trading plan that best suits your goals with your level of risk tolerance.
Most traders share the same fear - the fear of losing money, I think. I don’t think that’s hard to identify. However, I do agree that a properly made trading plan can allay at least some of that fear.
Fear is with every trader . Most of the times I loose money due to fear because I had no good analysis and close positions at loss again and again. Then I decide to take some risk with good analysis , choose small lot in trading set SL and wait for profit . This thing helped me to overcome fear.
Hm that actually sounds logical. But still you cannot always be 100% sure of your analysis and maybe then a certain amount of fear occurs as a natural reaction.
The fear occurs, I think, because of people’s anxiety caused by the unknown. It’s a primal reaction that is perfectly natural - yes, you’ve made an analysis, yes, it could even be a good analysis, but you’re still not sure whether you’re right. And that causes fear. Or at least it does in my case.
I experienced this kinda fear too. Sometimes I don’t feel that confident about my own strategy and then panic while trading. This fear of losing makes me even more nervous and I end up blowing my trade. i agree that Practice and discipline is needed to overcome this fear.
hi guys, I just finished reading a book “Trading in the Zone”…although there were “boring” parts in it, I found it quite useful still perhaps you guys can find it so
good luck