Forex Trading Psychology: Levels of FEAR

[asiaforexmentor 10]

Forex Trading Psychology: Levels of FEAR

 

FOREX TRADING PSYCHOLOGY

 

 

People can always relate FEAR to forex trading.

The fear of losing money.

The fear of losing that trade which is too much for you to handle.

However what most people do not realise is that there are different levels of fear.

Eg.

When you can afford to lose that trade, (which you still do feel fear)

you are still able to think rationally and life goes on.

(ALTHOUGH YOU STILL DO NOT WANT TO LOSE THAT TRADE)

In the example above, fear is definitely in our emotions.

But because the level of fear is low, we are able to handle the fear and still think rationally.

HOWEVER,

Eg. your forex trading capital is $10k.

Your current open trade is now losing -$5000.

And that’s half of your capital.

Or worst to say, that’s half of your life asset. (Money you can’t afford to lose)

Forex Trading Psychology – Fear kicks in. (This time in higher dosage)

Then you start seeing your open trade grows to negative -$6000.

Your Fear level increases, you can feel your heart beat racing.

And sure enough, your worst fear arrived,

The trade increases to negative -$7000.

Forex Trading Psychology: Levels of FEAR

 

Your level of fear had reached its final peak level.

(you know it when you feel):

- Desperation

- Your face turn black

- You isolate yourself

- You start blaming people, things, events

- You pray

When you feel this level of highest fear.

You can’t think rationally any more.

You know that you can’t think rationally any more when:

- You have decided to increase lot size on your next trade

- OR You decided to go ALL IN on the next trade

You want to get revenge on the market.

You now feel HATE and ANGER.

Forex Trading Psychology: Levels of FEAR

 

And sure enough, when you start to do things irrationally.

That is the downfall of your trading career.

So you see, there are different levels of fear.

And the highest fear can lead to other emotions like ANGER & HATE.

When you start to do all the above.

You know you have reached your highest level of fear.

It is time to stop trading for a while.

Go get a rest, a shower, a walk.

When you feel that you have calm down and begin to accept things.

I want you to think of what went wrong. (not to blame others)

but what mistake did you made in the trade.

Good chance is that you are risking too much.

And i want you to WAIT and NOT trade until your feeling of hatred, anger and revenge is gone.

That is when you are able to think rationally and go back to fix the problem.

Remember, forex is a journey and not a one time success.

Most traders want to make big bucks in a few trade. But eventually lose it all.

Professional full time traders are ones who trade consistently and happy with reasonable profits.

Let me know if you had experience the above before and what you did, or what happen?

 

Ezekiel Chew

Asia #1 Forex Mentor

[henryduncan12 10]

Thanks Ezekiel Chew to capture our attention for Levels of FEAR. I was familiar with forex/trading fear but never think about its level.

[Obsidian 10]

if you are trading with money you can’t afford to lose, you are not a trader, you are just a gambler

[Kiwi 16]

if you are trading with money you can’t afford to lose, you are not a trader, you are just a gambler

 

I don't think that is what defines the thing that is gambling. The basis of my opinion is:

 

Someone may not be able to afford to lose 20 or 30 trades in a row and thus be trading "money they can't afford to lose." But that doesn't make them a gambler. If they have a tested edge, trade to rules, are trading to discipline and not for the thrill of making or losing money, then they can be a professional trader. They may be in desperate straits but they are not gambling.

 

A gambler on the other hand is placing his bets for the thrill, not for the primary purpose of building or running a business. Secondary elements are likely to include the lack of a sound tested edge and a lack of discipline.

 

 

Just adding: there is also the issue of bet sizing. If you placed one or two bets (trades) and couldn't afford to loose it (both of them) then, even with an edge, that would be hard not to call gambling.

Edited May 26, 2012 by Kiwi

[Obsidian 10]

...Someone may not be able to afford to lose 20 or 30 trades in a row and thus be trading "money they can't afford to lose." But that doesn't make them a gambler. If they have a tested edge, trade to rules, are trading to discipline and not for the thrill of making or losing money, then they can be a professional trader. They may be in desperate straits but they are not gambling....

 

I think a professional trader would stick to the rules and never risk the money that he/she can't afford to lose;)

[MightyMouse 12]

I think a professional trader would stick to the rules and never risk the money that he/she can't afford to lose;)

 

Professional traders risk more than they can afford to lose all the time.

[Obsidian 10]

Professional traders risk more than they can afford to lose all the time.

 

like professionals in mf global and jp?:rofl: