Overcoming panic in forex trading

Daniel Richards

Daniel Richards

I am pretty sure- the 50% of the loss i had to suffer is because of panic! I guess you guys have an Idea how badly panic can effect your trading. Panic is one of the emotions associated with trading that trying to combat traders and investors in financial markets. This emotion, it can be characterized as painful and is caused by a sense of imminent danger resulting in a survival response, this regardless of whether the threat is real or just imagined. Panic is a powerful emotion in every human being, when traders start to panic they’ll usually close their positions quickly regardless of market prices.

As far I believe- to overcome the panic, we must be assured that the trading strategy that is used is functional and allows you to be a winner, we need to focus on development. Overcoming panic is not difficult, just think that the trading does not have a chance of history and that it is a separate business. Have total control of his choices and be aware will also allow not to panic.

The point is- Panic is a psychological problem, but a trader can easily get rid of force to think rationally, to prepare adequately to the market and study so as to be aware of its aspects and elements that impact . The trading plan and money management should be firm and only based on logical analysis. If our trading strategy is based on purchases and sales of logic, that the percentage of winning trades and very good, the risk-reward ratio is correct and that risk management is strict, so the probabilities for one is winning are in our favor, so there is no need to panic.

I hope you guys have other ideas about how to avoid panic. Please share with us.
 
IMHO thanks to Mark Douglas (RIP) traders tend to overemphasize the role of psychology in trading.

Lets talk about panic... Panic is a result of feeling utterly helpless... Why helpless? Because trader believes at the moment that his method (if he has one) will not help him, and there is nothing else there, he does not know what's going on, what to do, and how to save himself...

Remedy: stop trading and concentrate on developing the method, instead of over-analyzing panic.

Imho most psychological problems about which neither Douglas nor posters on this forum talk about are the problems trader face not when he is trading , but when he is not trading.

I am talking about the psychological problems associated with the realization that wannabe-trader has to develop something he does know how, and really without knowledge of what the criteria of what he is developing should be.

He is in the dark , alone, in the room, looking for the black cat, which he suspects may probably is not there at all.

Does he have enough time, money, talent to develop the method ? How much it will require really? He does not know...

But most of the people does not realize what I am talking about, they think they are good, that's why the start trading real money (instead of developing method)... Only when the shit hits the fan do they realize that they know nothing, they can do nothing, and the strange voice in their head or (or their ass) tells them: "What a f@ck are you doing here, mor@n!!! Run!!!"

That's when panic kicks in.

"Amat Victoria Curam" (Victory loves preparation)

If you panic, it means you unprepared, you have no method , or you really do not believe in method you have at hand...
 
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@danielrichards Seriously dude, what is wrong with you? Your prose seems forced and lifted from other sources--- please stop posting this annoying dribble. thank you, Gezunt
 
Got something to tell about our weaknesses.
Especially that you (OP) has a mystic profile picture.
Our biggest weaknesses is our habit to fix with ad hoc solutions.
It leads to phenomenon like Iatrogenesis that work against the weak itself.

Humans are in need to control, therefore to know, what's going on.
Especially as Emotionally attached being with money & hopes.
We're totally willing to gamble with losses (Optimism).
But we're soccer mums with gains (Pessimism).

So we can't fix such a behavior by adding...
One has to remove his need for certainty & comfort.
No amount of information will ever fix such pervasive sentiments.

I mean ... You only need a little advantage and discipline.
But our need for comfort and certainty blow every little gain away.

If trading (or any other job or endeavor) is a source of anxiety, fear, frustration, depression, or anger, something is wrong—even if you are successful in a conventional sense.

Profits flow with peace in mind !
Not the other way !
 
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I would suggest testing your strategy with sim trades. Once you reach certain profit level, I would go to say 1 contract size real money till you reach another level and you are ready to add more size.

A Forex broker said he rather his clients be profitable so they continue to trade with him. He noticed that many clients kill their winning trades quickly and let their losses run. So be the 10% of trader that let's your winners run more than your losers.

The reason a trader will kill a winning trade is that he does not want and is afraid for that trade to turn into a losing trade. He will not kill a losing trade in the vain hope that it will go back to BE so he can get out or he will average down in a losing position.
 
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