How to Identify Fear in Trading

 I have put a Poll on Twitter (https://twitter.com/brahmesh),  Which emotion is the toughest for you to control when trading?

Sharing the Poll Results till now, 43% said its FEAR which is dominating them and become difficult to control.

Strong emotions have affected your trading. Most of traders put lot of efforts to overcome this problem by learning on technical analysis learning more and more techniques every day, attending lot of Seminar and Webinars But that doesn’t seem to matter.

Most of Professional trades will experience Fear in there trading but the difference is they could still make profitable decision by feeling uncomfortable.

As a trader these emotion will come you cannot get rid of them but we need to learn how to keep this fear and discomfort from disrupting our trading decisions.

First Step to become comfortable with Fear is able to recognize it when it arises. It is important to be alert when you are becoming fearful.

Small Example– While Driving on a Rocky Terrain you will see sign board like Step Curve Ahead, When you see this sign your Brain automatically adjust to it, by slowing down the vehicle speed and being extra cautious.

On Similar Grounds The first step in learning how to deal with fear  that a trader may routinely face is to develop an awareness of its early signs and symptoms.

How can you Identify you are Fear

• Heart Rate Increases
• Breathing Increases
• Muscle are Tense
• Mouth Feel Dry
• You Feel very light headed/Numb
• Bite the Finger Nail
• Butterfly in Stomach
• Hand Palm Feels Slipery
• You do not Feel Hungry

When you are In fearful state the following will happen

• Unable to assess our trading position and evaluate what could be done to minimize the loss
• It becomes difficult for us to think clearly and thats why you forget your trading plan
• You enter in mode of responding ie you respond to market condition and exit the trade impulsively
• We can’t make detailed plans. We can’t compare alternatives.
• Emotional reactions can be made very fast, You just want to enter or exit position ASAP

 

 

If we can recognize the signs and symptoms of fear, not only do we understand better what it is we are dealing with, but we put ourselves into a position where we can recognize it early on conciously and take the corrective steps which we will discuss in next posts.

So take a few moments after reading this article  and try to clarify your own fear in trading.

How exactly do you experience it?

What do you feel in your body?

What is your mind telling you?

And, emotionally, how do you feel?

 

Experienced traders know that doing the same things as everyone else puts you in the herd, not outside of it. Profitability and success in trading will be elusive when taking the same actions as others,Like being fearful and taking impulsive trading decisions.