You have the right setups, a well-developed strategy, but still, you end up entering your trades either too early or too late. Your trades are going well, but you are afraid you might lose everything so you exit too early, missing the opportunity to earn more. What happens is fear consumes you, causing you to make bad trading decisions.
You can’t totally remove fear. It’s human nature. Feeling fear is not a sign of weakness either. To be afraid is part of normal brain function. And no matter how much knowledge or experience you have trading Forex, fear always exists.
Fear is not the problem. Your reaction to it is actually the issue. So, how do you deal with fear in FX trading?
Practice Risk Management
It takes money to make money. So to make money trading Forex, you need to risk your real money — your hard-earned money. That’s when fear comes into place. Fear in Forex trading stems from fear of losing money. To reduce your fear, determine your risk tolerance. Set a specific risk per trade. The recommended risk per trade is 1-2%. For example, you have an account balance of $1000. If you only want to risk 1% per trade, that means $10 is at risk. The idea is to know in advance how much you might lose in case the market traded against you. It prepares you that it’s no longer a factor when that happens.
Keep A Trading Journal
A trading journal is a tool that you can use to measure and keep track of your past trades. Moreover, keeping a trading journal allows you to identify your strengths and to work on your weaknesses. If your method didn’t work on your previous trades as you expected, make the necessary adjustments. Also take note of your emotional psychology before, during, and after the trades. Distance your emotions from your trading!
Take A Break
Losing is part of the game. But when you suffer a string of losses, that’s when your confidence stoops so low, and fear comes into place. You also question yourself at some point if trading is really for you. Taking a break is the best course to take. Give yourself some time to recollect your thoughts, and to regain your confidence.
