Experiencing fear while trading is normal, but it can get in the way of catching good market moves and being consistently profitable.
Fear is considered as a basic survival mechanism. Without fear, we won’t be able to recognize danger and respond appropriately.
The problem with fear comes when we let the perceived danger of stopping out or losing money scare us into making a decision that goes against good trading habits and our pre-determined trading plan.A lack of confidence as a result of a string of losses can lead you to abandon your plan as well. Being haunted by the fear of defeat can make it more difficult for you to “pull the trigger” even when you see a valid setup.
Lack of confidence may also manifest itself in other ways, like closing a winning trade earlier than you should because you’re afraid of losing gains
Aside from being anxious about potential losses, the fear of success is just as damaging as the fear of failure for some forex traders.
With success comes higher expectations. Take for example an athlete who just ran a mile in under six minutes. Chances are that the athlete will set the bar high on his next run and try to surpass his performance.This builds pressure on him to perform better than the last time. For some people, this is enough to keep them from even trying, choosing to sit on their hands to preserve their pristine performance instead.
If you’ve ever passed on the chance to pull the trigger on a setup you’re familiar with then later beat yourself up for not taking trades that could’ve been winners, then you know what I’m talkin’ about!
Another kind of trading fear you might have experienced is the fear of missing out.
This kind of fear can lead you to jump in at inopportune times — when the market has already moved so much. This, my friends, is what we call “chasing the market.”
Once you pinpoint the source of your fear, make the necessary changes in your trades. This way you have turned your fear into an area of growth and improvement.