Trade performance anxiety is a real issue and oftentimes has a cascading effect on how we handle trades or look at potential markets to invest in. It’s that feeling of worry that occurs when it’s time to pull the trigger on a buy or sell.
Did I do the research? Did I invest too much into this trade – or not enough? What if the market turns and I’m not watching? Lions and tigers and bears, oh my!
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Honestly, our imagination can be our worst enemy, and it’s feeding on your FOMO, making you grip your portfolio and wallet a little tighter. It’s natural to be a little nervous if you’re new to crypto trading, but if you find that the anxiety is increasing and you’re a seasoned trader, there are a host of reasons that could contribute to the stress.
One of these contributing factors is if you’ve been on a losing streak. These are terrible for self-confidence and you’ve reached the red line where one more loss might break any shred of confidence you have left. Sometimes, we have a “sixth sense” that gets our warning beacons up and makes us pause. Don’t underestimate your intrinsic sense to save yourself, but not at the expense of broadening your trading experience.
So how do you handle this as a trader? How do we stay emotionally on track when the anxiety of the trade is overcoming the will to push the button?
If you’re behaving differently, there might be contributing factors that you haven’t yet had the will to investigate. Yes, denial is a coping mechanism. So, let’s get out of denial and really look at what we can do to lessen the stress and depose the fear of losing money on your trades.
Let’s Talk About Stress
The primary reason traders falter isn’t because of a few losing trades. This happens with everyone. More often than not, the succession of losing trades begins to trigger an emotional response and panic begins to settle in, along with a negative mindset.
It’s okay to feel a little anxiety with our trades because there is hope and a dream usually assigned to those investments. Don’t deny it. We’ve all had those “what if” dreams about making millions in the market so we can go on permanent vacation.
Losing streaks give us a cold douse of reality, and it hurts but, we cannot get emotionally attached to these trades and trigger the snowball effect of disappointment, anger, doubt, and fear. When we’re feeling those stressors, we tend to make rash decisions, which only increases the anxiety.
On the flip side of that, you never want to be so relaxed that you don’t care. If that’s the case, why are you wasting your time? From this perspective, a little bit of anxiety is okay because we will tread a little more carefully.
All the Eggs in One Basket
Larger accounts have the capacity to diversify, but smaller account holders often feel like they can only get ahead if they go all in, and that’s a risk that most people do not take – unless they’re desperate.
First off, desperate traders might as well be donators because they’ve gone beyond impartial trading to full on emotional trading which is, guaranteed, a losing strategy and high stress marker.
Going back to having all of your eggs in one basket; this is not a necessary practice even if you are trading with small account. You will overcome the anxiety of trading if you are smart about it. Consider how aggressive you want to be and balance that with a risk-to-reward analysis based on a certain percentage of your liquid assets that you can trade with.
Loss Happens. Deal With It
If you are trying to rebuild your portfolio from a string of losses then you need to be in the right mindset to move forward with a clean slate and not let past mistakes hinder you from trying again.
Obviously, it’s no fun when you lose money but if you have gotten to the point where you only feel anxiety when you’re looking at your portfolio, then maybe you really just need a break to deal with the loss.
That temporary step away from trading could be the healing salve to get things back into perspective. The bottom line here is that the fear of loss often leads to trading performance anxiety.
It’s easy to say “deal with it,” but how?
Three R’s
I’ve eluded to it earlier. The quick and simple solution to losing money on the market is to stop trading. Three R’s to remember: return, reassess, revise.
Return to basics. Stop all losing trades and give your brain (and wallet) a break.
Reassess. It’s time to put your anxiety away and deep dive into the data. Knowledge is power.
Revise. Once you’ve put fresh eyes on the analytics, you can revise your plan with more confidence. You’ll also be weathered in the sense that you know what not to do moving forward.
Have A Plan
It’s wise to have a trading plan. It is equally wise to have an exit plan. When you know what you’re getting into and the markers that will trigger a safe exit, then the anxiety will lessen as your confidence builds.
May attention to your risk management structure and make adjustments when necessary.
Disclaimer
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