Why Not to Avoid Fear and Anxiety in Forex

01/28/2016 10:24 am EST

Focus: STRATEGIES

If fear and anxiety are so detrimental to a person’s trading, common sense would be to try to find a way to eliminate them from the trading repertoire. However, Maria Meramveliotaki on ForexCrunch.com suggests that rather than struggling against this emotion, the forex trader should embrace it.

A typical error many traders fall for is cutting their profits short while letting their losses run. The explanation behind this so common occurrence is simple: when losing, we hope that the market will reverse and we will then be able to make back the loss. When profiting, we get fearful and anxious that market may also reverse and that we will lose the profit we made so far. Some profit is better than no profit and therefore we decide to close the trade early before we hit our target.

If fear and anxiety are so detrimental to our trading, common sense would be that we should find a way to eliminate them from our trading repertoire. We may believe that if we manage to control them, our trading performance will skyrocket. But this is the exact problem in managing emotions: no matter how hard we try to control them, we just cannot do it. On the contrary, we may realize that the more we try to eliminate emotions, the more they insist to complicate our lives. Modern psychology stresses the importance of learning to accept difficult feelings rather than try to make them disappear. So what should we do?

First, just stay with the unpleasant emotion. Allow it. Make space for it. Do not fight. Do not struggle. Most importantly, do not avoid it.

Isn’t the need to stop feeling fear and anxiety that makes us decide to close the trade early? The thought that the market may reverse and that we will lose our profit is so uncomfortable that we must end the discomfort associated with it. Trading plan, indicators, and previous market analysis may be ignored for the sake of avoiding feeling discomfort. But even though anxiety is uncomfortable, it cannot harm you. Struggling with it can potentially cause more damage. To read the entire article click here…

By Maria Meramveliotaki on ForexCrunch.com

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