We all know that crawling feeling of fear and anxiety that comes when you are finally ready to open the deal and hover the cursor over that buy or sell button. Sometimes it can get so bad that you spend minutes if not hours afraid of opening a position, even if you know that you’ve done proper research and the position at hand could be worth your investment.
Even if you don’t feel anxious when opening the deal, the anxiety may come when it is time to leave the market or even later — when the deal is already closed. If at times you find yourself struggling with fear and anxiety in trading, this article is for you. Read it to understand how to cope with negative emotions and start trading in a calm and professional manner.
What causes fear?
First, you have to understand the nature of fear. As with any other problem you face in life, it is much easier to find the solution when the root cause is obvious. Once you understand how it works, you will automatically understand how to get rid of (or, at least, minimize) trading-related anxiety.
The first thing to understand is that there is nothing wrong with being afraid. Fear, as well as anxiety, is a natural response to the mysteries of the unknown. When we do not know for sure what lies ahead, we are likely to succumb to negative emotions, fear being one of them. It should be noted that fear is as natural as any other emotion we feel. The purpose of fear is to keep you out of danger. Not surprisingly, trading is not an exception. For your consciousness loss of money is a danger you want to avoid. Thus, negative emotions associated with it.
How to deal with anxiety?
It is not advised to hide from your emotions. Trying to suppress them is not an option, as well, as it will likely lead to even higher levels of stress and insecurity. How are you supposed to deal with fear and anxiety then? There are two things that generally contribute to calm and secure trading: 1) extensive experience, 2) your competence.
Let’s start with experience. Ever noticed how easier things become once you get used to them? Try doing something new and you will most likely fail or perform poorly for a couple of times first. The same applies to trading. The longer you trade (given, you are doing it regularly and thoughtfully), the more ready you will fill. After a month or two of intense trading you will automatically feel more confident. In this particular case, you don’t have to do anything special in order to feel calm and secure, it all will come naturally.
Now, to the second point, which is competence. It is true that with experience comes determination and calmness, but there is more to it. The more you trade the better you will understand the market. Everyone can agree that it is easier to feel confident when you know exactly what you are doing. When you know exactly when, why and how to open the deal, there is much less anxiety involved in the process of trading. Technical and fundamental analysis can help you develop required skills and techniques.
Remember that it is OK to feel anxious when your money is at stake. It is a part of the process. However, when you do your homework (use a well-developed trading strategy, use indicators, do not involve in emotional trading, abide by the risk management rules) you will see your anxiety go down. Don’t fight your anxiety — instead, develop your confidence.