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5 Pro Tips on How to Tackle Fear in Trading

April 05, 2018 12:29

Source: Shutterstock

Dear traders,

Trading-related fears are not limited to traders. Fear can hit anyone any time. The main issue is that fear can change your trading for the worse, even if you are a long-standing professional trader. Remember, fear is a symptom, not a cause.

Have you ever experienced that you consistently make some profit in the markets while trading with low risk, but as soon as you increase the stakes, it all goes awry? Here is a list of five trading fears that we all face.

Missing Out on a Trade

A wish to be successful and make pips will always motivate us to improve, but if we become too greedy, we will start doing things that we normally wouldn't. If you are too greedy, you will make revenge trades, jumping onto a freight train and holding onto positions much longer than your system tells you.

For example, how many times were you tempted to make a trade based on your gut feeling, even though your system told you not to do so? Have you ever been buying at resistance or selling at support?

Margin Calls

We are here to make profit on our investment, not lose it. But like any other investment profession, it bears a certain risk of losing your investment. We need to stack odds in our favour. If you can't understand the tripod of successful trading, then you stand no chance.

You need to obtain proper information about your system, money management, and trading psychology. Without it, you will lose, sooner or later. Remember, even the best traders have losses, but the difference is that they have overcome their trading fears.

Giving Back Profits

Whenever you are at a profit, you start to think about exiting a trade. You do whatever it takes just to secure your earnings, and you cut your winners short. Protecting your profits is a great thing, but letting your losses run or cutting your revenues short is something that you should always avoid.

This type of fear is connected to your experience. The more you lose, the higher your fear of giving back profits. It is like a pandemonium, and in the long run, it will not make you a winning trader.

Not Using Profit Stops

This is one of the biggest concerns for a newbie trader. There are many things we cannot control in our life. All investments have risks that are always present in all aspects of life. Do you have control over the EUR/USD exchange rate? Are you able to control inflation? The answer to both questions is no. However, if you know how to plan your trades and have the right tools, you will minimise the risk and stack the probabilities in your favour.

But one thing you should have control of risk management. If you are an intraday trader, using profit-stops is a must. Trust me, big institutional traders do it as well. Protecting your profits is extremely important due to intraday price volatility.

I personally do it each day. You can follow my live trading webinars and see how I do it on, real, live accounts.


You can watch this video for an overview of the ways to control your fear and tips on how to become a confident trader.

Fear management is a very important aspect of your trading career. If you do it successfully, you should be able to make money on a consistent basis and become a profitable trader.

If you have any questions, do not hesitate to ask me in the comment section below!

Cheers and safe trading,

Nenad

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