Conquering Fear in Trading
By Storm Copestand
You’ve been studying and learning how to trade for months, maybe even years, you know the markets and you have solid technical skills. When you trade on demo you do well and your account is profitable. Then why can you not replicate this in your live trading account? Why do lose, or remain at break even?
The difference is what is happening in your brain when you begin to trade with your own capital.
When a trader is suffering from fear, these are normally the outcomes:
Closing winning trades short in fear of giving profits back
Hesitate to pull the trigger because you fear a loss
Hanging on to losing trades because you fear taking the loss
Taking unplanned trades because you fear leaving money on the table
As soon as you enter a trade, your emotions begin to impair your ability to make rational decisions. If a few of your positions go against you, you start to feel uncertain and this discomfort gradually changes into stress.
Stress triggers the amygdala, located in the limbic brain. It’s primary function is to keep us alive at any cost – and this is where the fight or flight response comes from. The issue here is that our brain cannot tell the difference between real danger to life, such as a man eating tiger approaching, or an imagined threat, such as a 1% loss on your trading account.
When stress is high cortisol is released, the neo-cortex, or thinking brain, starts to shut down and we have trouble focussing on small tasks. Extended periods of stress leads to our physical health deteriorating and ultimately burn-out.
The fact is, that in trading we cannot eliminate fear or uncertainty, but we can learn to manage and reduce it.
We can retrain our mind to manage fear by learning how to regulate our emotions. Using mindfullness, breath control and relaxation methods, you can learn to manage the emotions, and stop the fight/flight response before it begins. You will start to notice that you are no longer being taken over by your emotional responses to fear and uncertainty when your capital is at risk.
Reducing fear and uncertainty can be done simply by having a watertight trading plan, and sticking to it.
Your mind is adaptable . By learning the potential of your mind, and it’s potential to change and combining that with your own determination to learn how to work with your mind and emotions you can develop your mind from short-term survival instincts to long-term probability management. Are you ready to make the necessary changes?
Storm Copestand is a qualified Rapid Transformational Therapist, and Certified Hypnotherapist specialising in helping traders overcome mindset and psychological blocks.