How to Overcome the Trading Fear of Pulling the Trigger (Blueprint)

Trading Fear of Pulling the Trigger

If you’re reading this guide, you’re probably struggling with the trading fear of pulling the trigger.

Perhaps you are on a losing streak and it appears that no matter what you do, you will just continue to lose money.

Or you may have previously blown up your trading account and are hesitant to trade with your new account.

Whatever the reason, the fear of pulling the trigger is more common than you might believe.

Let’s get rid of it once and for all.

We’ll show you how in three simple steps.

Step #1: Eliminate the frustration that comes with a loss.

The bad feeling that comes with losing trades is probably the most common reason people are afraid to trade.

Let’s face it: no one like to lose.

Losing Trader

And it’s not always about the money itself. Unless you take extreme risks, losing money on forex will not bankrupt you, especially if it is a small portion of your overall investment portfolio.

It does, however, damage your self-esteem.

We don’t know much about you, but if we had to guess, we’d say you’re a smart person.

This is simply because most people who try forex trading are smart individuals.

Programmers, business owners, doctors, lawyers, and so on—they are people who are successful in other areas of life and have some spare cash that they are willing to risk in the hope of higher returns.

The problem is that forex trading is nowhere similar to what most people expect.

Don’t feel bad if you continue to lose money despite investing time and effort into learning to trade.

Learning the fundamentals is critical, but the benefit of constantly expanding your repertoire of strategies, chart patterns, and indicators diminishes over time.

decreasing marginal utility in forex

You won’t trade every technique, and you won’t need to be aware of every aspect of price action.

It’s not like you will become a successful trader by reading fancy books or taking expensive courses. Even a degree in finance or business is no guarantee.

(These programs have little to do with actual trading anyway.)

Again, don’t get us wrong: you must know the basics. After all, you have to base your trading decisions on something.

However, just because you understand forex trading this does not imply that you are a trader ready to trade live accounts.

Knowledge allows you to make a trading strategy. No one’s saying you have to trade it with real money. It might not even work to begin with.

You should ask yourself three questions:

  1. Do I have a trading strategy?”
  2. Have I thoroughly tested my strategy using historical data?”
  3. “After testing my strategy, did it work properly? If not, did I make improvements and test again until the results improved?

If you answered “yes” to all three of these questions and are still losing money on your real account, this is called bad luck.

Everyone has losing streaks; you might eventually be profitable, but you just have to wait out the tough times.

Losing streak in forex

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There is no reason to be afraid of pulling the trigger because the more you do it, the closer you are to your strategy’s mathematical expectation, which is positive.

Since you tested your strategy, you should have a pretty good idea about the extent of the losing streaks that might occur.

Continue trading until your losses do not exceed what you would expect based on your testing.

If your losses exceed what you would normally expect from your strategy, the system is likely no longer functional.

Stop trading live in this case. Instead, return to improving the system until it can accommodate the changed market.

This is part of being a trader.

Now, if you answered “no” to even one of the three questions, consider yourself lucky to have the trading fear of pulling the trigger.

You should not trade on a live account and your reluctance to trade has prevented you from losing even more money.

You’re hesitant because you either don’t have a system or aren’t sure if it works. You only see the losses, which hurt, and you think you’re doing something wrong or the game is rigged.

hesitating

Fortunately, this problem is simple to resolve. At the very least, conceptually.

Before you would trade with real money, you must create a system and backtest in a paper trading environment.

Yes, it takes time, but you can find guides to help you right here on ForexSpringBoard.

These below are particularly relevant:

When you have a solid system in place, you will no longer be frustrated by losing trades because you will understand that they are a part of the process and that you will eventually be profitable.

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This will also mean that you will no longer be afraid to act on trade opportunities.

Step #2: Make sure you are financially prepared

Let’s face it: trading needs money.

Most people know that. But most people also tend to underestimate the amount of money they need for trading.

We’re not going to get into how to calculate the right figure because we already did that in another guide.

What we want to emphasize here is the significance of proper financial planning.

Trading is difficult, and no one wants to work hard for peanuts in return.

The problem is that if you have a small trading account, you can’t really expect to make serious money.

What’s even a bigger problem is that it only becomes obvious after you have burned a few accounts.

This is because taking high risks allows you to make much more money than if you kept your risk to sustainable levels.

(That is, levels that will save you from huge losses later on.)

For example, if you have a $1,000 deposit, it’s not impossible to make a few hundred dollars on a lucky day. However, in order to achieve that kind of return, you must take large positions in relation to your account size, and a big loss could quickly wipe you out.

Taking on too much risk

Again, traders usually realize this far too late, after their account has already taken a significant hit.

The trading fear of pulling the trigger is a common occurrence in people who take on too much risk in their trades.

They understand that if things don’t go as planned, they will lose a lot of money, which naturally makes them nervous about acting on trading opportunities.

The solution to this problem is fairly simple: you must reduce your risks to a level that you can confidently handle.

Everyone is different in this regard.

In our experience, the sweet spot is where you trade amounts that are not too large to be concerned about while still being large enough to make trading worthwhile.

Making sustainable forex returns

For example, if your account is $3000, you might risk $30 per trade. You are far less likely to be concerned about losing $30 than you are about losing $300.

At the same time, if things go well, you might make some extra money to take your family out to dinner, go to the movies with your girlfriend, or do whatever you want.

Yes, you may need to adjust your expectations. But would you rather pursue unrealistic goals and continue to stress and lose money, or would you rather change your mindset and be content with small winnings?

We’re not saying give up on your dreams of becoming wealthy through forex trading if that’s what you want, but trading a small account with high risks is not the way to do it.

Step #3: Work on your trading psychology

Following what we have taught you so far is enough to boost your confidence and eliminate your trading fears.

That said, we are all human and even if we do everything perfectly, emotions can occasionally get in the way.

There is little we can do about it, but in this final section, we will give you some tips to help you maintain your confidence even in difficult times.

Working on your trading psychology helps to avoid the trading fear of pulling the trigger

Since you have a strategy and limit your risks, difficult times can only mean one thing: a losing streak that is longer than normal, as you know from testing.

Rest assured; this is a hard situation even for experienced traders. It sucks to go from making profits to losing money.

This is when people begin doubt themselves, especially if you’re trading things like chart patterns, which are more subjective; it is easy to think that you chose the wrong setups hence the losses.

It also doesn’t help when the market seems to be playing games with you.

Gosh, how many times have we had the price going our way then make a U-turn just before the profit target and stopped us out.

stopped out just before the profit target

Can you relate to that?

The thing is that trading is a notoriously hard job. That’s why working on your trading psychology is important.

And, no, trading psychology will not solve all of your problems. Contrary to popular belief, your system and money management are far more important than the “right mindset.”

You will not make money unless you have a system with a positive expectation. Period.

But trading psychology is crucial in that it will help you push through hardships.

People with the right psychology are less likely to break down or make costly trading mistakes under pressure.

So how do you work on your trading psychology?

There is no one way to do it. Trading psychology is a hazy concept. It’s difficult to say exactly what it means.

Nevertheless, here’re some suggestions that probably fit the bill:

  • Learn some basic statistics. Understanding probabilities helps cope with randomness.
  • Know your personality. Trade in a way that is convenient for you. Don’t force a trading style just because you think you will make more money with it. You won’t.
  • Don’t be too dependent on trading. Have other sources of income to avoid being pressured.
  • Exercise regularly. It helps you to focus better and improves your mood.
  • Don’t center your life around trading. If your life revolves around trading, any difficulties will have a significant impact on your well-being. Meanwhile, if trading is just a small part of your daily routine, you can devote more time to other things when it is not enjoyable. You can even take a break for a few days and do something else that interests you.
  • Journal your trades and write notes on them. It will make you understand what drives your results and you will be in a better position to fix potential issues.

These should be enough to get you started! You can also read inspirational trading quotes right here, we collected 51 of the best.

Conclusion

In this guide, we looked at how to overcome the trading fear of pulling the trigger.

It’s easier said than done, but it really boils down to a few simple steps.

In a nutshell, don’t trade live accounts until you’ve proven you have a competitive advantage.

When you have the odds on your side, losing trades become part of a process you already know and trust, making them much less painful to deal with.

Of course, you must also ensure that you stay in the market long enough for the probabilities to work in your favor.

That’s why you should keep your risk small on each trade. This will reduce the pain of losing trades even further.

When losing trades are no longer associated with negative emotions, you will no longer be afraid of the possibility of a loss and will find it easy to act on whatever opportunities the market presents.