Fear And How It Affects Forex Traders

Fear And How It Affects Forex Traders - Trading Dispatch

Often we find ourselves either running towards or running away from a topic, task, or even a new skill when we don’t understand it or when it looks too hard to do. Every person reacts differently! We become beings afraid to try and afraid to see the possibilities for what they are, possibilities.

More often than not it is our fear that holds us back and keeps us from pulling the trigger on an investment, educating ourselves, or even in the Forex markets when trading.

Where does fear come from?

It is said that fear starts in the mind and flows through the words we utter daily. To the point where we don’t even realize that what we are saying isn’t helpful for any form of growth or any direction.

The word FEAR is a term that describes an emotion induced by perceived danger, pain, harm, or a threat- Either from our experiences personally, what we have seen people go through or even more interestingly; what we have heard about something. This emotion may cause a behavioral change and a psychological shift, usually clouding judgment and clarity.

What’s even more interesting is that you aren’t born fearful, but rather it’s something you gather more of on this journey of life when you are either hurt, when you’ve lost something (or someone), or when you are told something unpleasant which causes a change in behavior.

So, we can then say that the sum of our experiences in life plays a huge role as to how we perceive certain events, how we act on what we perceive, and maybe even how we react or respond after the event has passed. Better yet how we react when we realize that an even may repeat itself right in front of our eyes.

Almost like the fight or flight response. Either we hide away (fear) or we stand up and we respond accordingly to the markets.  The unknown often scares a lot of us yet we don’t realize that there are just certain events- that are not in our control nor can we change them or tell beforehand how they are going to plan out- and that frightens us!

The way we have been wired as human beings plays a role in our fears too. Especially when we are afraid to step out into the unknown. We have been taught that to be good or okay we need to follow the system around us and everything will be fine, and so stepping out of that box and entering a space where your personality and style of trading is purely expressed through you (as the trader) is daunting but freeing at the very same time.

Can fear be a good and bad thing?

Fear makes us aware of potential dangers that may occur and how we may respond in these occasions, it can be a good and bad thing when it is understood and consciously recognized whenever it presents itself.

By developing the ability to control that awareness you can see the market for what it is showing you and use that advantageously. As a trader, you need to be able to push fear aside and deal with the information at hand and not overthink the information to come. Fear gives you alertness, but nothing more. It can either be your slave or your master in a flash!

If it is not obliterated entirely, on your journey, it can become a disorder leading to anxiety and depression and may cause failure in the markets.

How to handle psychological fear as a Forex trader?

I believe the only way to handle the fear of the markets is to work on YOURSELF! MENTALLY AND EMOTIONALLY.

You may even be thinking to yourself; “But what about the technical skillset? Surely that counts for something in my trading?” – It most definitely does! But only a small percentage of it, unfortunately.

I say this because you can have all the strategies in the world and still not pull the trigger on a pair. You will still not enter your buy or sell order, because you are fearful.

But let’s work on handling the fear!


  • Allow your creativity to roam in the markets and ask questions. Start by asking questions about your favorite pairs, see why they move the way they do. BACKTEST!


Too many traders neglect back-testing when it’s there to give you confidence and get rid of the fear.

When I mentioned working on yourself mentally and emotionally earlier, I was saying it is important for you to understand yourself and how your personal life can make you afraid. You maybe haven’t dealt with fear well because your experiences have left scars and you are afraid those experiences may rise again. Those too can affect your psychology in the market.

Your mindset is one of, if not the most, critical aspects of trading. Not just your analysis, not just your management (although that is important too), but your psychology! That is IMPORTANT!!!


  • Get around people who trade and inspire you.


This way you can focus more on the craft, your wellbeing, and improving daily (not the systematic mundane things we do within borders).


  • Learn more about your behavioral patterns.


This will teach you how you respond or react when you’re stressed, upset, fearful, happy, and even clear-headed. Work on adapting and tackling your fears head-on.


  • Tackle the fears head-on


Do more of the things that scare you, whether that means speaking to someone, speaking out about your experiences, issues, going bungee jumping, whatever the fear may be. Do it! The easiest way is to get someone you know will keep you accountable to join you and do it with them.


And whilst you do all this, tackle the fear of making mistakes along the trading journey because you’re not perfect. There has to be a little failure sometimes before success comes knocking on the door! WORK ON YOURSELF and keep trading!

Happy trading Traders!

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Emmanuel Maphosa

Emmanuel Maphosa

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