It’s important to understand the difference between fear and anxiety when we’re trading.
Legitimate fear is our friend. Legitimate fear serves a warning to tell us something’s wrong. It’s the signal to be alert , to review our positions and plans. If we find something wrong, we can fix it. If not we let go of it and move on.
Anxiety on the other hand is our enemy. Anxiety occurs when we imagine bad things happening for no valid reason. Like when we consistently focus on a trade going bad even when there is no legitimate reason to do so.
The biggest problem with focusing on a trade going bad is that we, as people, always look for evidence to support whatever we intensely focus on. And if there is no supporting evidence, the brain will make evidence up. When we believe this made up evidence, we become anxious and stressed.
Logically, everything is within parameters. Our plan says to do nothing. Yet the imagined evidence points to disaster. This prompts us to deviate from our plans and trade poorly.
To avoid anxiety, take a step back and focus on what IS happening not on what MIGHT happen. If you have a good plan, things are either working out or they’re not. If they are not working as planned, take the appropriate action. If they are working as planned, then there’s really no problem is there?
In the event you don’t have a good plan, that’s a legitimate reason for fear. Take action and exit your positions then create a proper plan before you resume trading.
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Make it a phenomenal day!