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The Psychology Of Trading: Fear
The psychology of trading is a big subject.

So let's talk about fear today.

Fear and trading is not a good match since fear will most often cause you to make mistakes (more mistakes = more money lost).

Trading can be really scary if you don’t know what you’re doing. 

Since money is our tool to make money in the markets you must have a fearless mindset when trading so always follow your trading plan, even when it’s really scary to take a trade.

Our relationship to money can create fear and pressure that can be hard to deal with when your trading is not going so well. You have bills to pay and maybe a family you want to provide a good life.
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You have probably heard that controlled breathing help you relax and reduce fear. Quick breathing is a trigger which starts all anxious and fears into action. 

Controlling your breathing can help you become and stay fearless when trading.

So when you feel fearful follow this simple breathing blueprint:
  • Focus on your breath (the feeling when air travels into your nose/mouth)
  •  Take a deep breath in (3 seconds)
  •  Pause for second
  •  Then slowly breathe out (3 seconds)
  •  Pause for a second
  •  Repeat the process for a minute or two
You will get the calmed and fearless trader feeling immediately. The in and out breath seconds are up to you so try to find what give you the best results as long as you keep the out-breath longer than the in-breath.
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It’s impossible to get complete control of your outcome in trading since trading is a game of probabilities where we can’t control a positive outcome of every trade. 

We naturally want to control and predictability, but is it possible to ever have control?

A professional trader can still make mistakes. Even if you can run, you can fall. Naturally, where we don’t have control, we experience fear. 

If you, on the other hand, give up the illusion of control, you will become a fearless trader.
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Whenever you feel fear, stop for a minute and think of what you are grateful for instead. 

If you’re afraid of losing money, be grateful for the opportunity to create your own life being your own boss.

The money you are trading with today will be nothing compared with what you will trade within a few years.
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This one is a big one. If you find yourself breathing more quickly or feel anxious when you’re thinking about trading you probably have a negative expectation about your trading.

Having a negative expectation will make you feel fear when it’s time to trade and you’ll most definitely also get a negative performance.

To get a winning performance you need to change this negative expectation to a winning expectation by preparing. 

Imagine the trading day ahead of time; see yourself winning and fearless. This will automatically help you feel fearless when it’s time for you to trade.
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When we trade with fear it’s hard to think clearly. 

Not thinking clearly will make block your way of looking at the markets at an objective view so you’re missing out on information that can help you in your trading. 

By using numbers you can activate different parts of your brain that help you lose the fear.

Try to scale your fear from 1 to 5, 5 being the most terrified it’s possible to be and 1 being the fearless state. 

Ask yourself: “What number on the scale am I right now? “ Just doing this will lower the fear because it kick-starts the thinking brain, you’re taking control, weakening the emotion and automatically making you calmer.
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Johan Nordstrom Professional Trader Risk Management
I'm a family guy in my late 20's who learned how to trade the markets in a simple yet effective way. During university I studied investing and graduated with a master's degree in risk management. Quickly, I realized that I was onto something. I started helping friends and taking students. My students started getting results, spent less time in front of their screens, and their accounts grew consistently. Learn more about me here.
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