Fear of losing is a major stumbling block to lasting trading success. It is possibly the biggest threat to our survival as traders and to our ability to move beyond our self imposed limitations.
Fear is not something that singles out the weak, the un-courageous and timid, no, fear is in all of us, but its very nature makes it so, that we are too afraid to look it in the eye, hence the deeper reasons behind it are never uncovered.
So it is with the fear of losing money, which we will examine in more detail today:
Fearing trading losses is unlike many other fears:
Why? Because, when you have losing trades, you encounter a physical measurable loss, which is not necessarily the case with other forms of fear. Like the fear of flying, or the fear of water, or the fear of speaking. These types of fear might stop you from participating in a worthwhile experience, but the physical damage to your ability to survive is not threatened. If you cannot overcome your fear of flying the worst case scenario is that you might travel by ship, or by car taking much longer to reach your destination, or not travel at all. If you never learnt to swim because of a fear of water, or never went on a cruise, it isn’t the end of the world, again, you might miss out on a potentially enjoyable experience, but that is as far as it goes.
Even the fear of speaking at worst might cause you some momentary embarrassment if you are asked to speak at a friend’s wedding, alas your survival is not threatened. The fearful moment is soon forgotten and life goes on as normal.
By contrast the physicality of losing money in your trading account presents a very different scenario:
When you lose, you see it in your bank account. There is no delay, you cannot make it go away. There is no getting away from the loss. It is there black on white, staring you in the face, reminding you of all the other losses you endured in your life time. If you choose to walk away from it, you only come back to the issue, so you might as well place another trade in the hope that the pain goes away with a winner…But wheat if the next trade is also a loser?
The mind enters into high alert fight or flight mode and before you know it you posted the third losing position. At this point most traders minds freeze: They hesitate over the next trade entry, increasing risk of the trade, or they don’t pull the trigger for the next trade taking days to get out of the excessive anxiety of having yet another loss in their trading accounts.
Confidence is low and you begin to doubt everything you thought you know about trading. You are desperately looking for answers, which that makes the mental turmoil reach unbearable.
Sure enough, you know it too: That old adage: You got to be in it to win it.
But your mind now has proof once more, that losing represents pain, it threatens your survival and therefore you must stop the slide at all cost. More pain, more stress.
I will not go into how you brain gets completely out of sync, or cohesion, when these thoughts and emotions run rampant, but you can read more in this article about brain coherence.
For now let’s go a little deeper into the “reality” of your fear.
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