Fear of failing is a universal feeling that almost everyone has or will experience; it is the number one factor that stands in our way of achieving something that we want and/or reaching our goal(s). As a child perhaps it was a fear of being the last person chosen to be on a team. This same fear is something that directly effects us as adults, mind you the circumstances are usually a bit different.
As a beginning trader and even an experienced trader, we face challenges daily and the stakes are a bit higher than being chosen for a team. The decisions that we make will impact our day to day lives financially and potentially our loved ones as well. Suffice to say it is good practice to do everything in our power to move past this fear into acceptance and learn from our mistakes.
As trade decisions are made give yourself a task that will remove you from the stressful situation. Many trading platforms are equipped with audible alerts and even email or SMS alerts, use this technology to walk away from the computer to get a fresh perspective and to occupy your mind elsewhere. This way, when you return to find the trade outcome it is known instantly and therefore not a constant weight on your shoulders. In doing so you are taking precautionary steps to alleviate the fear of losing money.
Risk management is of the utmost importance for each and every trade. Having a trade plan to identify large reward with low risk is a great way to accept a small loss when it occurs. Losing is a part of trading and should be planned for in advance. If we are taking a huge loss we may not be able to recover both mentally and financially. Small losses allow for longevity and help to reduce the fear especially when you see a large winning trade.
Each winning trade is a great feeling and produces a sense of power, however we tend to learn much more from our losses. Anything that hurts causes us to spend more time thinking on the matter instead of just moving on. Use this time to study the actions that were executed correctly versus the ones that were executed incorrectly. By noting this in a trade journal, it allows us to review and make sure that we make every attempt not to let the incorrect occurrences happen again.
The last thing that we want to do is lose at anything, however that is a part of life and certainly a part of trading. You don't want to waste your time fearing the possibility of losing when we know it is inevitable. Instead make every effort to accept it and allow yourself to move forward. In the words of Bruce Lee "Don't fear failure. - Not failure, but low aim is the crime. In great attempts it is glorious even to fail."
Remove yourself from a stressful situation that is sure to cause an emotional rollercoaster, build a plan that reduces your exposure to each trade and keep a journal detailing your mistakes. Spend time on these mistakes so they do not become a part of your routine. If the mistakes show that there is a bug in your trading plan, make the appropriate changes and test your theory until it has proven to work. Hopefully this will help reduce the fear of failure in your trading.
CFTC RULE 4.41 HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
Trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one's financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. All Software provided or purchased is strictly for educational purposes only. Any presentation (live or recorded) is for educational purposes only and the opinions expressed are those of the presenter only. Testimonials may not be representative of the experience of other clients or customers and is not a guarantee of future performance or success.
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