Updated from its original posting on 2013-03-24
Here’s something that you need to realize: the fact that you can have big winning months means that YOU do have it in you to become truly profitable.
From my years of experience as a Pipsychologist, a traders’ inability to truly make it big in the forex market, more often than not, stems from fear. I’m sure you know what I’m talking about. After a strong profitable month, ask yourself the following questions:
- Do you feel anxious to trade again for the fear of losing your recently gained forex profits?
- When you do force yourself to take the next forex trade, do you have difficulty sticking to your proven trading strategy?
- And finally, are you reluctant to deposit more money into your trading account even though your past performance indicates that you have the necessary skills to become consistently profitable?
Do note, however, that this isn’t your regular run-of-the-mill “fear of losing.” Rather, it is the fear of being stuck and ending up right where you started. It is the fear of crashing back down, making you think you cannot reach those highs again. The pain can be particularly excruciating if you came from a place where you were doing very well.
The good news is that I’m here to help you overcome this fear with these three steps:
1. Recognize your fears
The first step, like with all problems, is to recognize and accept that the fear is indeed there. Being defensive or in denial will do you no good, as you’ll ignore the problem. At the end of the day, you will merely end up repeating the same mistakes over and over again.
2. Treat trading as a business
After you accept the fear, you have to learn how to be objective about forex trading and treat it as the serious business that it is. Some months, you may be on a roll and the money will just keep pouring in. Other months however, you may get in a rut and come out with a net loss. You have to accept that this is normal and just the cost of doing business.
3. Stick to what works for you
Next, get back to the basics. Look through your forex trading journal and see what was working for you and what didn’t. Continue to do what was working and change the things that weren’t.
Of course you will never completely eliminate your mistakes, but limiting them and sticking to what initially made you successful will go a long way in helping you cast away the fear.