I have two handy little acronyms for this topic that I’d like to share. They’re both helpful in the face of fear and I think most folks will find one or the other helpful. The first one is “Face Everything And Rise” (FEAR), which sounds nice, but in the context of trading, it’s easier said than done. For me, fear creeps in when I’m projecting into the future, worrying that my stop loss order will be blown through overnight on an overall market gap down or that my next loss will mark a dreaded downward trend that will mess with my mentality.
While the idea of just facing my fears is a hard one to digest, I learned a cool mental trick that goes with it. When thoughts of fear, dread, and worry crop up, it triggers bravery and a heightened state of awareness. But to be honest, I haven’t been able to consistently master this. I can’t seem to just “face it” with grit and determination or grasp how to simply “rise above” it. This little saying helps, but it hasn’t stuck when big trading events occur. I get super overwhelmed with trading and/or life stuff, and then that saying goes right out the window.
The second acronym is “False Evidence Appearing Real” (FEAR), and this one resonated with me more. Especially in regards to trading, this falls more in line with my personal mental problems and my affliction with fear. In the past, I could fake getting by the fear, but not so with trading. False evidence appearing real, aka my thoughts, were really getting in there and preventing me from reaching my potential with trading. It would come time to enter the trade, and I’d freeze, watching it flitter off and hit all my goals without me. Or, I’d get into a position, follow my rules and plans, and the first time it goes against me, I get panicky, fearful, and start justifying jumping out.
So how does the latter acronym fit in to one of my cures for this mental affliction? I found that negative thoughts and overall negative projections were a big culprit. Thinking negatively, thinking like Eeyore, will likely lead to negative outcomes. Thinking/believing that things might not work out ends up being a self-fulfilling prophecy. Thoughts aren’t real, though, and they’re certainly not the truth of life and reality that is going on outside of us. I was able to nip that in the bud right away, but I was still experiencing so much fear with every trade.
Even having expectations built up in your mind of how that trade is going or should go is a recipe for disaster. That was the root of the problem for me: building up expectations, not living in the moment with clarity. Instead, I was projecting either positively or negatively and setting myself up for disappointment or fear. It took me a long time to realize this and deal with it. Curse you, expectations! Curse you, sneaky negativity monster!
How do I deal with fear now? First of all, I deploy massive amounts of awareness. I meditate before markets open to keep my mind clear and have nature sounds in the background to keep myself chilled out. Sometimes, I use the heartmath monitor to help track myself. When it beeps, I breathe into it and watch my thoughts and emotions carefully. Awareness is key.
The biggest help, though, is having a solid system. My trading focus is on mastering the fine details of my system, rules, and general guidelines. The old saying “Focus on the process, not the profits” comes into play here big time. The second I start looking at the money, the second I start thinking about making a quick win… magically, I lose. Then enters fear, enters uncertainty.
So, I do my due diligence in accordance with my system and rules. I examine the risk-to-reward ratio and the odds of it playing out in my favor. Once all that is okayed, I more or less just have to let it ride. Because at that point, if I don’t, then I’m fearfully sitting on the sidelines waiting for despair and frustrations to hit me because of all the trades I didn’t take. Living in woulda, coulda, shoulda-land is just no fun either. I would rather take the well-thought-out calculated risk and lose than look back at the end of the week at all the trades I missed out on but didn’t take due to fear.
Accept the fact that you might lose. Even a 9 out of 10 shot you have of being right could still go south on you. That’s just part of the game. If you follow your system/rules and you’ve done your due diligence but you still end up losing, there is nothing to be bummed about. View it as being simply powerless against your system and comply with it. Whatever the outcome, you did your very best in preparing and stayed true to your trading system.
So stay away, fear! You mean bastard. You are just false evidence trying to appear real. It’s all in the mind.
