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Thread: Forex Trading Psychology: Levels of FEAR

  1. #1
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    Forex Trading Psychology: Levels of FEAR

    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


  2. #2
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    You're right, trading is like any business, it will fail if it not properly researched, rehearsed, and organized. Most business starts ups fail because the above are not adhered to. A business of mine floundered a few years ago because I was far too idealistic about its potential, I saw only what I wanted to see. So many people coming into trading are similar, particularly those that have purchased a ' winning system '. I was one of them, naively believing that all i had to do was to do exactly what it said on the box and I'll soon see the dollars piling into my account. When I realised this was nonsense, I set about learning how to trade properly, because I could see the vast potential in it. Now a couple of years down the line, i am still learning, about the markets and about myself, but I've come a hell of a long way.
    I think psychology is the most important factor, provided you have the necessary background technical information. If you ever heard about the Turtle traders experiment, it shows that different people with the same exact system have drastically different results because of psychology.


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