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5 Steps To Overcome Fear In Trading

How To Overcome Fear (Trading Psychology)
The psychology of trading is a big subject.

So let's talk about the fear of trading (the worst emotion for traders).

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

Here's the deal:

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

Since money is our tool to make money trading, you must have a fearless mindset when trading. Always follow your trading plan, even when it's scary to take a trade.

Our relationship with 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 to support.

Here are five steps on how to overcome trading anxiety and control the fear of trading.

1. Prepare For Winning Performance

"Trading is: 90% mindset and 10% skills"

This one is a big one. Suppose you find yourself breathing more quickly or feel anxious when you're thinking about trading. In that case, you probably have a negative expectation about your trading.

Having a negative expectation will make you feel fear when it's time to trade because fear blocks your way to think clearly, so you will most likely make one or more common mistakes

Why does this matter?

Because it will most definitely also result in a negative outcome of the trade.

To prepare for a winning performance, you need to change this negative expectation to a winning expectation by preparing and telling yourself you can trade successfully. 

Imagine the trading day ahead of time. Visualize yourself following your trading plan with discipline. Visualize yourself how you easily overcome and can control fear. Visualize yourself winning.

Imagine the trading day ahead of time will help you feel fearless when it is time for you to trade.

Here's my traders affirmation you can use to prepare for a winning performance:

2. Controlled Breathing

You have probably heard that controlled breathing helps you relax and reduce fear. 

Quick breathing is a trigger that starts all anxiety and fears into action. 

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

So when you feel fear of trading, 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 immediately and be able to overcome and control your fear of trading. 

The in and out-breath seconds are up to you, so try to find what gives you the best results as long as you keep the out-breath longer than the in-breath.

3. Release Control Of Outcome

It's impossible to get complete control of your outcome in trading since trading is a game of probabilities where we can’t control or guarantee a positive outcome of every trade.

Trading with a good risk reward ratio is important for a positive outcome. 

But that's not enough.

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

No. 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 overcome and control fear.

Here's who you release control of the outcome:
Mark Douglas's book 'Trading In The Zone' is one of the best trading books ever written.

4. Gratitude

Whenever you feel fear of trading, stop for a minute. Think of what you are grateful for instead. 

If you are afraid of losing money, be grateful for the opportunity to make money from trading and the freedom the trader's lifestyle can give you.

Think long-term – the money you are trading with today will be nothing compared to what you might be trading with within a few years. 

5. Activate "The Thinking Brain"

When we trade with fear, it is hard to think clearly. 

Not thinking clear will block your way of looking at the markets from an objective view, so you miss 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 is possible to be and 1 being the fearless state. 

Ask yourself: 

"What number on the scale am I right now? "

Just doing this will help you overcome and control fear because it kick-starts the thinking brain. 

You are taking control, weakening the emotion, and automatically making you calmer to think clearly.

To stay in this mindset, you want to follow a proven system with simple trading rules. 

Like I show in this video:

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Johan Nordstrom Professional Trader Risk Management
I'm a family guy in my early 30'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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