Many traders tend to be nervous during the development of a setup. Their heart beat sky rockets, the palms of their hands become sweaty, their every thought weighing the pros and cons of staying in the trade or exiting.
Do you recognize this agony yourself? Most of us Forex traders will certainly say yes, either because we still have it or had it in the past. Beginning and intermediate traders are especially prone to suffer from it.
It is absolutely CRITICAL to remove the nervousness during a setup. Otherwise the trader will end up making decisions based on fear and greed and they will exit their trade way too soon most of the time. At the end of day this means that traders will take too many losses and fail to capture significant rewards and profits.
I have succeeded in losing this discomfort and insecurity when in a trade and I want to help you achieve the same. As traders we do not have to trade in fear. But it does take experience and some conscious re-training before the nervousness has vanished. Here is some actionable advice to help improve your ability to avoid early trade exits.
- FOCUS ON HIGH PROBABILITY SETUPS
If you are having trouble with staying in a trade, then another useful advice is to focus on high probability setups and/or take smaller units of risk on each setup.
Forex traders love jumping in trades… The idea of making profits and pips pushes their excitement to the max which is soon replaced by anxiousness when the trade does not develop as expected. How many times are they rudely awakened to reality that price moves up and down? It becomes much easier for a trader to stay in a trade when that trader enters a trade setup which has a lot of confluence (technical and/or fundamental) and a good probability of success. The natural ups and downs of the market will not scare you the trader when you find a setup with lots of potential.
- SET UP A TRADING PLAN
Traders must embrace a road map when trading. Without a clear plan and action steps, traders get lost in the confusion and noise of the market movements and ultimately make emotionally based decisions. Once that occurs, traders often end up in a losing proposition by selling at low points and buying at peaks. A trading plan helps traders avoid these dangers.
- CONFIDENCE VS RESPECT
Trading psychology is a vital part of the re-training effort. As traders we must be confident but we must also strike a balance between confidence and overconfidence.
- The WRONG way: traders are often INSECURE about their own approach to trading, but overly SURE about the direction of the market itself.
- The result is that these traders quickly lose faith in a trade when the market develops against their position, which usually does happen at one point or another.
- When price does not confirm their views on the market, they become very insecure, display lots of nervousness and/or blame the market.
- The RIGHT way: traders are SURE about their approach to trading, but RESPECT the market and the fact that nothing is a sure thing in trading.
- Traders must realize that they cannot influence the market, but only their own plan. No trade is a guaranteed win.
- SEEK THE HELP AND ADVICE IN A TRADING ROOM
Traders can help overcome their fears of being in a trade by following more experienced traders in a trading room. The extra guidance and explanations provided by the mentors will help traders stay calm and reduce nervousness. Mentoring is an essential step when learning to trade the Forex market and is highly recommend for every aspiring and learning Forex trader.
- TAKE SMALL LEVELS OF RISK AT THE START
Lower levels of risk also help traders overcome their fear. The importance of a win or loss decreases when only a reasonable amount of capital is lost on one single setup. This helps increase the ability of a trader to “live” through the cycle of a setup. Once the confidence (see point 1) matures and the experience increases, the risk can be increased to a normal level of risk.
- LOOK LESS AT THE CHARTS
Once a trader is in a setup it is recommended to reduce the time spent reviewing the currency pair that is traded. Reviewing the trade over and over again will only lead to doubts and fears. A better approach is to analyze different pairs OR even to walk away from the computer. Traders must avoid the habit of mindlessly following each tick movement, which will only lead to difficulties in executing the trading plan.
- DON’T ZOOM IN TO LOWER TIME FRAMES
Traders also tend to zoom in to lower time frames once an entry is made. This way they can keep an eye on price action and the development of the trade. The problem is that when a trader takes a setup on a 4-hour chart and then zooms in to a 15-minute chart, the price action is NOT relevant for their decisions. The 15-minute chart will only distract them from the ultimate goal: following the trading plan.
Remember, there is absolutely nothing wrong with zooming into a lower time when hunting for a trade entry. But do not zoom in to lower frames once the trade is taken. If a trader wants to keep an eye on the price movement, it is a best practice to watch price action on the same time frame as the trend.
- MATCH TRADE MANAGEMENT WITH YOUR PSYCHOLOGY
Some traders discover that they feel more comfortable with a set and forget trade management, whereas others might prefer a more active way of managing the setup. It is important to match the management of the trade with your psychology.
Traders want to avoid that their trade management decisions are impulsive, not planned and gut reaction to a single price movement on the chart. They also want to avoid making trade management decisions too soon and thereby block any profit potential.
Basically, traders must give time and space for a trade to develop. This is especially important at the beginning of a trade. When a trade has been open for a while, then traders can be more demanding and potentially use trade management techniques more actively (unless you are using a set and forget).
Are you nervous during a trade? Do you know why?
Or did you already overcome the fear when in a setup? How did you achieve this? Are there tips and tricks that you can share?
Please let us know down below to help all our readers and traders, thanks!
Thank you for sharing this post and wish you Happy Hunting in the upcoming week of trading!
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