Warrior Trading Blog

How To Overcome Fear When Trading


Don’t feel bad if you are currently feeling fearful and anxious when trading; you aren’t the only one. Even on the best of trading days, it just has a way of wearing you down, especially if you can’t seem to get a handle on the game’s mental side. Unfortunately, emotions have no place in trading, no matter what type of trading you do. Whether you day trade, swing trade, or into long-term trading, you can’t allow emotions to guide your decisions.

Think about it. When you are fearful and anxious, you try to put yourself in a protective place, a place of comfort. We tend to look for easy indications of what to do next. It’s during times like these that it’s harder to have faith in yourself and your decision-making ability. In addition, stock trading brings stress even in the best of times. It is natural for traders of all experience to feel fear on some level. However, there are ways to lower this fear. Here are some tips on how to overcome fear when trading.

Losing Out

First of all, the fear of losing can push all of us to make irrational moves sometimes. When making a trade, the fear of losing can often have more than one consequence. It can delay your execution or timing strategy. It can also lead to the inability to trade, sell, and buy, leading to all but freezing your trading.

Nonetheless, you need to be decisive when taking action in strategic new entries and exits; don’t allow fear to hold you back from taking action. It will cause you to lose confidence in your ability, which, in turn, will lead to your inability to make confident decisions in the future as well.

No one wants to lose, but it happens even to the best of us. The key is to lose little – less than you gain – allowing you to stay in the game, both financially and mentally. The longer you’re able to stay in the trading game with sound strategies, the more experience you will gain, and the more confident you will begin in your decision-making. Just remember, you have to be able to take a loss; get used to it.

Missing Out

Next, a lot of fear we’re missing out on the “next big thing.” Every trend has its bandwagon as well as its doubters. Not every trend is a winner for long, and some trends last longer and are bigger than anyone would have imagined. Everyone wants to catch the big trend, but doubts “this” is the next one; then they get jealous because other’s cashed in.

This type of situation can be dangerous because if you know something is trending and believe the sky is the limit, you will be willing to buy no matter what the price. If the stock ends up being a “one hit wonder,” so to speak, the stock will peak and drop quickly once the trend wears off. You could end up losing a fortune. Fear can cause you to miss seeing a downside, but it’s always there. There’s never an obvious winner. Something can always happen. Don’t let fear of missing out guide your decisions!

Profits Turning Into Loss

Some people like taking quick profits, but instead should be cutting their losses short and letting their profits run. Some traders feel like locking in that win makes them a winner. It does, but only in the short-term. Learning to be a successful trader needs a long-term commitment. Stick with a stock until you have enough evidence that the trend has reversed. Real trends generally last a long time, generating huge profits. Don’t let your fear of losing your profits cause you to pull out too soon. You may cut your own profits.

Not Being Right

Lastly, everyone fears not being right. Some people can’t handle being wrong. Don’t place too much emphasis on always being right or proving you are always right. Instead, stick with your strategy and learn to create positive results over time. Instead of focusing on being right at this exact moment, look at the long-term game.

In order to be successful in the long-term, you may have to sacrifice a bit of your ego sometimes; you won’t always be right. The quicker you accept that, the easier things will be, and the more you’ll learn. Don’t let fear or greed rule you, but do be cautious.


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