How to overcome your fears in Trading – Trading Psychology

Do you want to know more about trading psychology and how to overcome overcome your fears in trading? Watch our latest video and get profitable trading results.

How to overcome your Fears in Trading – A simple but effective guide

When speaking of psychology, one of the most basic premises that the human mind will do is attempt to move away from fear, and head towards pleasure. Fear in the financial markets can cause sudden and violent movement. This is obvious, especially when you see a marketplace that has been broken down drastically. However, what is less well known is that fear can also get you out of the market when you should be looking at either adding to a position, or simply letting the market take its natural course of action.

How many times have you been in a position, only to get out when it moves against you slightly, and then watch it go in your original direction? This is very common and is based upon fear. When you see a nice uptrend, if you look a little bit closer the one thing that you will notice is that it tends to pull back occasionally. This is the same in downtrends as well, and no matter which direction you are trading, the market can’t move in your direction forever. Every time the market pulled back, there will be people getting out of the market based upon fear.

So how do we avoid fear? It’s pretty simple actually. The biggest cause of fear is the fear of loss. If you find yourself jumping out of the market to quickly, most of the time it can be attributed to being overleveraged in a position. The simple solution is to cut back on some of the leverage, creating smaller positions that you can hang onto and take advantage of. Remember, by trying to get rich quick, you are jacking up the invoice and making it very dangerous to trade. If you lose your trading capital, you can never become wealthy. Slow and steady wins the race, and fear is simply your subconscious mind trying to tell you to bring down the position size.