Some traders fall victim to greed while others experience loss in trading to a point where all they see is anxiety and fear. Everyone in the trade expects to make quick money, but when the prices begin to move against the trader, the fear or anxiety take over. Even if we have protected ourselves and placed our self at a stop-loss position still the feeling of intense anxiety takes over.  Sometimes when the solution is not already figured the “Deer in the Headlights” syndrome takes over where we freeze up and are unable to take any action as we see the prices move up quickly against us while the losses keep increasing.

This fear of losing too much too soon can also make one exit the trade fair too early. Even before the loss hits the “profit target” the fear of losing the money itself takes over. To overcome this fear, the trader hits the exit button on the ongoing trade which is displaying small profit even when the trader had higher confidence and hence executed the plan to make a larger profit. When there is extreme fear of loss, the trader might resort to uncertain ways to overcome it, whether that leads to jumping into a trade or out of it. It is important not to allow the fear to lead one to unhealthy habits, behaviors or harmful coping attitudes like alcohol abuse.

The inevitable fear handling

Fear is most sig­nif­i­cant, out of all anxiety emo­tions, for the traders. Countless traders strug­gle with the emo­tion and fear can highly demo­bi­lize a trader from using his/her hard learned market and technical skills.  Sig­nif­i­cant trad­ing losses many a times lead to tur­moil and emotional distress. These incidences need to be addressed, or else the trader might re-experience the scary mem­o­ries in the future trading. Fol­low­ing dreadful losses, the trader might get par­a­lyzed and will be unable to enter any future trade.

Although the aspiration to trade may be very strong, the mind’s mental reaction to fear can be much stronger. Foreseeable pain is dodged by not entering the arena. This is not weak­ness but merely the brain’s attempt for self-protection, even though it leads to much more dis­tress and frustration, and works against a person’s inter­ests as a trader. There are tutorials that teach techniques based on leading edge research from human psy­chol­ogy, to build con­fi­dence and curtail fear. Many traders might have already expe­ri­enced that after a series sig­nif­i­cant losses, the build up trad­ing psy­chol­ogy gets in to the way of trad­ing, even when traders train and improve their tech­ni­cal trad­ing edge. Numerous traders stop stock trad­ing and do not ever return. Oth­ers keep on working hard to correct and understand their flaws in the tech­ni­cal game, later only to understand that no tech­nique they learnt will ever help them over­come the fear. To gain suc­cess, traders are required to man­age not only the tech­ni­cal game but also the emo­tional aspect of stock trading.

“Carl Jones is an independent trader that loves writing about trading!”