Direct from the desk of Dane Williams.
This is a play on words from a popular saying in the hip hop scene that goes “Scared money don’t make money!”
The premise of the saying is that people who are too afraid to take risks in music, business and life won’t make any real money.
Because without risk, you will never make any real rewards.
In forex, scared money refers to those traders who are too risk averse to put on enough size, in the right setups of course, to make any real money.
Why do forex traders feel scared?
Let's face it.
Trading forex is not easy.
It's a demanding and stressful pursuit, not suited for every personality type.
In saying that however, managing your fear is a skill that can be learned and refined through diligent practice.
With enough screen time repetition, you can certainly gain control over the often paralysing emotion of fear.
What does scared money lead to?
The mistakes that feeling scared leads to cutting winners short, letting losers run or simply not taking a trade at all.
The repercussions of succumbing to your fear as a forex trader are profound.
Scared money will almost always result in detrimental mistakes that lead to you losing money.
Especially over the long term
I’m talking issues such as:
- Prematurely cutting your winning trades short
- Allowing losing positions to continue to run
- Simply abstaining from taking proven trade setups.
This fear-induced decision making hampers your long term profitability as a trader and completely undermines the essence of your trading strategy.
How can forex traders control their fear?
Reclaiming control over your fear necessitates a holistic approach.
First up, I’d encourage you to ditch your demo account and start trading on a live account.
As there are no financial consequences for making the wrong decision on a demo account, there is no reason for your brain to feel scared or any other related emotion.
If you don’t feel the negative emotions of losing money, then you will never be able to overcome them and make the right decisions for your long term profitability.
Trade 0.1 or 0.01 lots on a live account instead.
Next, you need to make sure you have total confidence in your own trading strategy.
Something you can only have by meticulously back and forward testing, before trading it live.
As I’ve spoken about before, a profitable trading strategy for someone else may not work for you and your unique personality.
To gain confidence you need to put in the time to gain it.
Final thoughts on scared money in forex
In the highly emotional game of forex trading, showing fear stands as a formidable adversary to your long term profitability.
It is the antithesis of seizing opportunities and realising your potential of being a consistently profitable forex trader.
To overcome fear, you must embrace risk with the calculated confidence that you can only build up by putting in the time in front of your screens and learning the unique personalities of each currency pair.
I believe in you.
…but do you believe in yourself?
Best of probabilities to you.
Posted Using InLeo Alpha
It is okay to feel anxious before taking a trade. However, as a full time trader I have learnt that whatever will make me take a trade is based on both technical and fundamental analysis. Whatever the outcome I don't mind
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I know this feeling all too well. Especially when trading with small accounts. Every little bit counts in those times so making risky trades can be hard. I was dealing with this recently and it helped immensely to switch my time frame for longer swing trades. Just less stressful than trying ti mess with the little moves.