Forex Trading Psychology: Levels of FEAR
Forex Trading Psychology: Levels of FEAR
FOREX TRADING PSYCHOLOGY
People can always relate FEAR to forex trading.
The fear of losing money.
The fear of losing that trade which is too much for you to handle.
However what most people do not realise is that there are different levels of fear.
Eg.
When you can afford to lose that trade, (which you still do feel fear)
you are still able to think rationally and life goes on.
(ALTHOUGH YOU STILL DO NOT WANT TO LOSE THAT TRADE)
In the example above, fear is definitely in our emotions.
But because the level of fear is low, we are able to handle the fear and still think rationally.
HOWEVER,
Eg. your forex trading capital is $10k.
Your current open trade is now losing -$5000.
And that’s half of your capital.
Or worst to say, that’s half of your life asset. (Money you can’t afford to lose)
Forex Trading Psychology – Fear kicks in. (This time in higher dosage)
Then you start seeing your open trade grows to negative -$6000.
Your Fear level increases, you can feel your heart beat racing.
And sure enough, your worst fear arrived,
The trade increases to negative -$7000.
Forex Trading Psychology: Levels of FEAR
Your level of fear had reached its final peak level.
(you know it when you feel):
- Desperation
- Your face turn black
- You isolate yourself
- You start blaming people, things, events
- You pray
When you feel this level of highest fear.
You can’t think rationally any more.
You know that you can’t think rationally any more when:
- You have decided to increase lot size on your next trade
- OR You decided to go ALL IN on the next trade
You want to get revenge on the market.
You now feel HATE and ANGER.
Forex Trading Psychology: Levels of FEAR
And sure enough, when you start to do things irrationally.
That is the downfall of your trading career.
So you see, there are different levels of fear.
And the highest fear can lead to other emotions like ANGER & HATE.
When you start to do all the above.
You know you have reached your highest level of fear.
It is time to stop trading for a while.
Go get a rest, a shower, a walk.
When you feel that you have calm down and begin to accept things.
I want you to think of what went wrong. (not to blame others)
but what mistake did you made in the trade.
Good chance is that you are risking too much.
And i want you to WAIT and NOT trade until your feeling of hatred, anger and revenge is gone.
That is when you are able to think rationally and go back to fix the problem.
Remember, forex is a journey and not a one time success.
Most traders want to make big bucks in a few trade. But eventually lose it all.
Professional full time traders are ones who trade consistently and happy with reasonable profits.
Let me know if you had experience the above before and what you did, or what happen?
Ezekiel Chew
A complete professional forex trading system that even newbies can apply instantly. Asia Forex Mentor's forex course is now FREE!
Very true. This is an excellent article explaining fear in trading
But it is hard to overcome this fear
Your level of fear had reached its final peak level.(you know it when you feel):
- Desperation
- Your face turn black
- You isolate yourself
- You start blaming people, things, events
- You pray
Many people have faced this situation :D. ![[grin]](/themes/default/images/smiles/grin.png)
The good or ill of a man lies within his own will. – Epictetus
with $10k capital if someone is loosing $5k to $7k at a time, it is one of the worst money and risk management. Usually traders starting with $100 to $200 may loose 50 to 70% but with above $1k capital, it is very unlikely that a newbie will risk 50% capital in one trade.
Originally posted by Champwith $10k capital if someone is loosing $5k to $7k at a time, it is one of the worst money and risk management. Usually traders starting with $100 to $200 may loose 50 to 70% but with above $1k capital, it is very unlikely that a newbie will risk 50% capital in one trade.
There r some traders who risk high capital. For example martingale users usually loose all of their money in one or two days.
Stick to your rules
You haven't mentioned the easiest ways to avoid fear
1) Trade only where only where risk is limited where there is high profit potential with SL
2) Only trade small amount of account per trade
Eventually you have to face losing money - to stop constantly being stopped out you must be very limited in your entries.
Forex trading contains fear because this business is risky and our wrong way of trading can suffer a loss and many of trader loose here just because of that only so we feel fear while trading.
Levels of fear increase as the percentage of probable loss increases. To overcome it, u need to be a professional trader. If u r not a pro, u can never overcome fear of loss unless u dun care about invested capital.