You've been in the market for a while now, and you're starting to get nervous. You see red on your charts. Selling off may not be an option, and you can't help but feel like things are going downhill fast. You start to panic. Sound familiar? If so, then you might have some trading anxiety. We've put together a list of tips for how to deal with trading anxiety that you can try before your next trade.
Ways to Deal with Trading Anxiety
Set realistic goals
Set realistic goals for yourself, and manage your expectations when you make a trade. While keeping your eye on the bigger picture is essential, don't get carried away with unrealistic expectations. Having reasonable goals will help you enjoy trading without the baggage that comes with the challenge of making perfect trades.
There is no such thing as a perfect entry or exit point, and there are many ways to calculate position sizing to maximize profits. Accepting the fact that you'll lose at times is also an essential part of learning to trade.
Traders who consistently over-analyse every possible consequence of every decision and then waffle over which action to take end up causing themselves unnecessary stress with little, if any, positive returns.
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When you lose money, do not invest more money
If you have been losing money, do not invest more money, hoping that will change your luck. Blindly increasing your risk per trade is a fast track to disaster. Take your time to get used to higher-risk trades and make sure your overall risk per portfolio is still within your comfort zone. If your broker allows you to reduce position size and take smaller profits, do so.
When people lose money, it is natural for them to want to do something different, hoping they will make money back. It's also possible that this could amplify the pressure, even if you're taking the same setups.
The most common cause of trading anxiety in the forex market is that your position size is too big for your account size. For example, a trader with $500 will feel anxious over a $100 trade because they're afraid of losing. Meanwhile, traders with a $10,000 account will not get anxious over a $100 trade, because they're more confident. However, if your account is bigger, the chances of making un-calculated decisions also increase. This can lead to irrational decision-making.
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Taking a break from trading will help you clear your head before making another trade
As you sit in front of your screen, the 'what ifs' and 'if onlys' start to seep into your mind. Will the trade make money? Or will it lose? Do I have enough money to make a difference? Should I pause the trade? Did I place my stop correctly? Trading creates a ton of anxiety for new traders.
When the market's not going in your favor, you'll probably feel like you're on the edge of a nervous breakdown. This makes those who trade for a living especially vulnerable to performance anxiety.
If you're a trader, you should avoid excessive stress altogether. Don't let your feelings of pressure or anxiety overshadow your trading abilities. Keep a cool head, and remember that you put in the hard work to succeed in forex trading. It may be helpful to step away from the screen to clear your head, listen to some music, or take a break — whatever helps you relax.
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If you tend to get anxious or distracted by the market's price movements, we suggest you stop looking at notifications on your smartphone or computer. You will only cause yourself undue stress. Take a break from the news and chat apps. With this "detox" period, you can tell if what you're feeling is normal or not.
Eliminating the unnecessary factors that contribute to stress in your life will help you deal with trading anxiety better. It's not about just relieving stress, but rather it's about controlling the factors that cause it in the first place.
Relax and focus on one trade at a time. Stick with your trading plan. Take focused action, act fast, and book profits or cut losses as soon as you have confirmation.
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Focus on process, not outcome
Overcoming trading anxiety can be as simple as reminding yourself of what's essential. Your trading experience will improve if you approach trading with excitement, a positive attitude, and helpful strategies. Profits will become secondary to the process.
You can quickly build accountability into your trading by awarding yourself points for sticking to your plan, cutting your losses, or increasing your position.
Check your results at the end of every trading day, and ask yourself a few questions. First, did you follow your trading system? Second, when the trade went against you, did you cut your losses or ride them? And finally, how much risk did you take on?
If you answered yes to all of these questions, you are fantastic! Keep up the good work and develop good trading habits, such as using an effective risk management strategy or system.
In summary, picking the right trades and using the right strategies can help you deal with trading anxiety. Begin by understanding your goals and creating a trading plan or finding a couple of brokers supporting your trading method. Keep asking yourself, "Am I investing in a way that is in alignment with my values? “And if that doesn't help, we've got plenty of articles on our site that will.