Risk Control = Fear ControlWhen we hear about fear and trading used in the same sentence, we of course think of, being in a trade that is going against us. Here is an interesting twist on fear – can you believe that fear can actually keep us safe? Think about all of the lessons you have learned in life. The best lessons learned come from pain – or I should say the fear of feeling that pain again. For an example, it only takes one time to stick your finger into a wall socket –right? Once you have tried that, you are done – except for perhaps Uncle Fester of the Addams Family. It looked like he actually enjoyed it. However, it is a little harder for traders to learn this lesson. As beginning traders, we make mistakes such as over trading our account or, trading with funds that we cannot afford to lose. As a beginner, did you ever trade without a stop loss? Did you ever revenge trade to get back up from a losing trade?If you use proper money management guidelines you will have the ability to control risk therefore controlling your fear. While trading 1% or perhaps 2% of your account, you already know what the worst trading scenario could be, which, puts you at ease.
Of course stop losses are an effective practice for managing your fear. Hint here – DO NOT use mental stops as they just do not work as you become emotional about your trade. ONLY USE HARD STOPS. And with that being said NEVER move your stop away from your trade. The only reason why you should move your stop is to move it so your trade becomes less risky, or, move it to lock in more profits.
Avoid risky situations and you will see your fear dwindle away. Use proper money management techniques along with a solid concrete stop loss while trading and you are on your way to stress free trading.
Awesome trading to you!
Tags: forex, Forex Confidential, Forex video
