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How To Overcome Fear (Trading Psychology)

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

So let us talk about fear of trading 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.

Here are 5 tips on how to overcome and control fear of trading.

1. Prepare For Winning Performance

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 and telling yourself, you can do it. 

Imagine the trading day ahead of time; see yourself winning how you easily overcome and can control fear. This will automatically help you feel fearless when it is time for you to trade.

Here's my effective trading affirmation you can use:

2. Controlled Breathing

You have probably heard that controlled breathing help you relax and reduce fear of trading. 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 immediately and be able to overcome and control fear. 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.
Want a beginner friendly strategy that actually works? Download your free pdf strategy guide.

3. Release Control Of Outcome

It is 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 overcome and control fear.

4. Gratitude

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

If you are 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.

5. Activate "The Thinking Brain"

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

Not thinking clearly will make block your way of looking at the markets at an objective view so you are 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 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.

It's important to follow a simple system with entry, take profit and stop loss rules to stay focused and not get stuck in a trade too long. Getting in and out of low-risk and high-reward trades is the key to clear thinking and profitable trading, as 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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