Beating The Fear In Forex Trading


Whether you’re new to the wonderful world of forex trading or whether you’re well versed in the art of buying and selling, there is a single universal truth for one and all… currency trading can be scary!


Of course, the fear is partly what attracts us to trading in the first place. What’s life without a little risk, after all? But fear starts to become problematic for traders when it gets in the way and holds you back, driving you to making all sorts of terrible trading decisions that ultimately lead to substantial losses and failure.


There’s no place for emotion when it comes to trading and you’ll need to keep your own in check if you want to see success. Fear is perhaps the biggest obstacle you’ll have to overcome if you do want to start making real wins – and don’t be fooled into thinking that it’ll be an easy thing to accomplish.


Many traders find it really hard to keep fear at bay and all that work they put in researching different strategies and picking up different technical skills goes out of the window. Fear ends up making the decisions for them – and they’re usually the wrong ones.


Of course, it’s normal to feel fear when you’re investing so much time and money into something. You don’t want to lose, after all.


But also bear in mind that this fear can also be a force for good, as well as evil, as it means that you’ll assess all the risks properly before making any decisions. Just make sure you don’t let it overwhelm you and paralyse you into doing nothing or acting rashly. A clear head is an absolute must!


What are you afraid of?


The first step to conquering your fears is to work out just what it is that scares you most. Some fears are more common than others and it’s just a matter of being honest with yourself and seeing where you need to focus your attention first.


Fear of loss is, of course, a very common problem that traders develop. No one wants to lose their money. Losses early on can compound this issue, with traders spurred on to reduce their trading – so the chances of profits are also reduced.


Another really common fear is the fear of being wrong. Failure is inevitable and this needs to be acknowledged.


You can’t expect to be an expert immediately and it will take a lot of wins and losses before you can say you truly know what you’re doing – and the losses are a really important part of the process, so check your ego at the door and accept that you’re bound to make mistakes along the way. It’s not about being right… it’s about making money!


And then there’s the fear of missing out. This is one of the hardest ones to overcome and is largely driven by greed. When you spot a potential trade a little on the late side and you consider it to be a great opportunity, you pounce because you don’t want to miss out, even if it goes against the strategic rules you’ve set for yourself.


How can you beat the fear?


The good news is that, even though fear while forex trading is inevitable, there’s a lot you can do to address the problem head on.


The way you trade will help to keep your fears under control. First of all, never risk what you can’t afford to lose and make sure that you choose your trades appropriately. This may limit potential profits, but it’ll cut your losses as well and help you to build confidence.


Coming up with a specific trading plan is another excellent strategy to bear in mind. By following this and not deviating from the rules you’ve set for yourself, you’ll be able to reduce uncertainty and fear… and enjoy trading all the more.


Overtrading is also something to avoid where possible. If you trade too much, you’ll sustain unnecessary losses and this can take a real toll on your confidence levels. When your confidence dips, you’re more likely to experience fear of loss. So take a break, don’t trade and come back with a new mental and emotional approach to the game.


Have you tried mindfulness?


Away from the currency exchange market, you might find something else particularly useful when it comes to keeping your fears under control. Meditation and mindfulness can really make a huge difference to the way you trade and how you handle wins and losses, so if you’ve been feeling a little overwhelmed of late, it could certainly be worth a try.


A recent study carried out by researchers at Harvard-affiliated Massachusetts General Hospital found that mindfulness meditation could actually alter how the brain processes fear memories… and even extinguish fearful associations altogether.


Sara Lazar, senior author of the study, said: “Fear and anxiety have a habitual component to them – the memory of something that provoked fear in the past will trigger a habitual fear response when we are reminded of the event, even if there is no actual present moment threat.


“The data indicates that mindfulness can help us recognize that some fear reactions are [disproportionate] to the threat, and thus reduces the fear response to those stimuli. Mindfulness can also enhance our ability to remember this new less fearful reaction and break the anxiety habit.”


From a trading perspective, practising mindfulness will help to keep your mind clear and more focused on the present moment. You’ll find you’re better able to read and analyse the market and are less likely to make ill-considered decisions in haste.


And you’ll be able to boost your performance by avoiding destructive trading practices, driven by emotional responses to the likes of anger, greed and fear.


There’s a reason why so many professional sports teams around the world are increasingly using mindfulness to help give their game a boost.


Anchoring yourself in the present moment keeps you entirely focused on your current pursuit – but how do you go about achieving this particular mental state and how do you stop your thoughts, anxieties and worries from intruding?


How to practise mindfulness


The great news is that mindfulness is very easy to practise and it’s achievable for everyone, with immediate benefits to be realised from the very outset.


It can be done anywhere and at any time, which makes it perfect for traders, as the trading world changes constantly and there’s no telling what might happen, so having a tool you can employ at the drop of hat is particularly advantageous.


First of all, make yourself comfortable in a space that feels calm and quiet. Sit or lie down and set a timer for a short time (five to ten minutes, if you’re just starting out). Bring your attention to your body and how it feels, making sure you’re in a comfortable position.


From there, bring your attention to your breath, following the sensations as you breathe in and out, noticing how your chest and belly rise and fall, how the air feels passing in through the nose and out through the mouth.


Your mind will wander as you do this – and don’t try to control your thoughts. The aim here isn’t to quiet your mind… this is impossible! When your mind does wander, acknowledge the thought that has appeared and then let it go, returning the attention to your breath once again.


It can be a lot harder than you might think not to dwell on the thoughts as they appear, but be kind to yourself and don’t judge yourself harshly over what’s popped into your mind. Just bring your attention back to the breath each time.


What’s even better about practising mindfulness to up your trading game is that it will have all sorts of positive knockon effects in other areas of your life, as well.


Studies have been done that show mindfulness is effective at reducing depression, anxiety and stress, can improve emotional regulation (which we’ve already discussed!), can improve your memory and can help you think more flexibly and clearly.


Interestingly, research has also shown that mindfulness can help relieve the symptoms of all sorts of different health conditions, including lower back pain, fibromyalgia, type 2 diabetes and rheumatoid arthritis… so it seems like mindfulness has a lot of the answers, extending from the trading floor and beyond!


As for trading, attitude is certainly everything and it’s important to identify your strengths and weaknesses before you embark on your career as a trader. Being honest with yourself is essential, so you can make the necessary adjustments to your mindset that will help you see big wins more often and keep those hits to a minimum.


If you want to start trading when you like, where you like, sign up to one of our funded trading accounts and immediately start trading with real money. We provide inhouse trader support, alongside courses and online coaching… so don’t worry! You won’t be going it alone!

Recent articles


FTUK Funded Account Disclaimer

CFTC Rule 4.41 – Hypothetical or Simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, because the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs, in general, are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.

All our funded accounts come with a fixed equity stop out level. Once the account equity level gets below this fixed stop out bar, we will close all running trades and disable trading and access. The stop out level is a fixed value for each funding level, this means that any profit which has been made by the trader increases the loss allowance.

Order in

10% Off