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Tips for You to Overcome Forex Performance Anxiety

Have you ever been unnecessarily over-conscious about your trading that it affected your forex performance negatively? Then you, my friend, have just experienced a classic case of stage fright or performance anxiety.

Performance anxiety usually occurs when you scrutinize every single detail of your trading decisions too much, to the point that each action becomes subject to criticism. This behavior (which is also experienced by athletes, artists, and students) usually has a crippling effect on overall performance as the pressure to achieve a certain goal can cloud one’s judgment.

As forex traders, we are constantly subject to the pressure of making profits that we sometimes lose sight of the importance of sticking to the trading plan or practicing proper risk management. Here are some tips that can help you overcome performance anxiety in trading:

1. Forget that perfect trade.
My favorite trading psychologist, Dr. Brett Steenbarger, noted that the most common source of performance anxiety is perfectionism. Traders who tend to be preoccupied with catching the best possible entry and exit points, maximizing their profits through position sizing, and never losing a trade end up being disappointed with themselves when they fail to meet these goals.

Instead of looking for that perfect forex trade setup or never losing a trade, remind yourself that there’s nothing wrong with just going for the profitable trade and that the market won’t always go your way. A controlled loss or ending up with fewer pips than you ideally could’ve is not the end of your trading career.

2. Focus on the process, not the profits.
Forgetting that perfect trade may be difficult for some as this could be misinterpreted as lack of ambition. If this holds true for you, then it might be better to set goals based on the process and not on your profits.

For instance, you can give yourself points for sticking to your trade plan, for cutting your losses, or for pressing your advantage. At the end of each trading day, you can ask yourself the following questions: Did I execute my trades the way my system said I should? Did I make the proper adjustments? Did I manage my risk properly?

If you answered yes to all three questions, then you deserve two thumbs up! If you wanna be perfect, focus on executing good trade/risk practices and processes perfectly.

3. Take baby steps when increasing your risk.
Another root of performance anxiety in forex trading is when you greatly increase your risk per trade instead of adjusting it gradually. This usually happens when traders gain confidence in their trading and decide to put more money on the line in their next trades. Without any accompanying adjustments in your trading psychology, this could also magnify the pressure even if you’re taking your usual setups.

To illustrate, put yourself in the size 14 shoes of an NBA player about to take a free throw during the last seconds of a tied game. You’re about to take a shot that you’ve made probably a thousand times before, yet the pressure to not miss the basket is also a thousand times greater than usual. Even seasoned players still choke during these moments, and it’s not surprising that traders can also commit more mistakes when they’re more conscious about how much is at risk.

To avoid this, you can increase your risk at a more gradual pace instead of doubling or tripling it right away. It could also help to remind yourself that the only thing that’s changed is the amount you’re risking yet you’re still taking your usual setups and still following your same old trade plan.

4. Step away from the screen.
Performance anxiety manifests itself in overtrading as well.

It shouldn’t come off as a surprise. The internal pressure of making money sometimes blinds our rational thinking. Instead of sticking to our trading plans, we just let our emotions get the best of us. Overwhelmed with the need to make up for our forex losses, we may end up taking one trade after another and before we know it, we’ve already lost so much money!

The most obvious solution to this problem is to step away from the screen once you’ve hit your maximum trading loss.

Remember that there will always be a tomorrow for those who choose to preserve their capital today. For those who don’t and blow their trading accounts, well, there’s always Hollywood.

5. Get a life.
When your world revolves around trading and the market is just not going your way, you’ll probably feel that your world is collapsing. This makes those who trade for a living and who have little else going on for them especially vulnerable to performance anxiety.

So don’t put all your eggs in one basket. If you do, chances are, you will only subject yourself to unnecessary stress. Find yourself a nice laid-back hobby or engage in adrenalin-pumping sports. Do something that you will enjoy and provide you with an outlet of distraction for those times when the markets go against you.

At the end of the day, don’t beat yourself up for feeling like a choker and allow yourself to be overcome by performance anxiety. If you feel it coming on, just step away from the screens, relax and remember that perfect forex trading performance and setups don’t exist. Backtrack to the realistic expectations you have set for yourself ahead of time, and you’ll be surprised at how keeping your goals in check can turn your trading around!

Source: BabyPips.com                                                               

 

 

4 Factors That Lead Traders to Ditch Their Forex Plans

 

Whether you’re testing out new strategies as part of your 2015 resolutions or you’re sticking to your favorite forex trading method, you should protect yourself from these four things that might tempt you to abandon your trading plan.

1. Boredom

Even though the forex market never sleeps, we’re not guaranteed 24 hours of action a day. There are times when there’s little to no activity on the charts, and it can be quite boring waiting for a valid setup to materialize.

Unfortunately, some traders react to boredom by FORCING a trade just to get a bit of action, a bit of excitement. They deviate from their plan and take trades that they normally wouldn’t trade under normal market conditions. Not surprisingly, trades caused by impatience are executed with impulsiveness and can result in bad trading decisions.

If you find yourself bored while trading, you could break the monotony by stepping away from the charts and giving yourself a break. Visit trading forums, read other traders’ blogs, or clean up your inbox. But do not abandon your trading plan.

2. Distractions

While boredom can lead to bad trading decisions, being surrounded by too much excitement can also be harmful. I’m all about having a comfortable trading environment, but if you find yourself dancing to the latest radio hits, watching the Lakers lose another game, or checking out who broke up with whom on Facebook, then your workspace might not be as conducive to trading as you think.

Distractions can lead to a loss of focus. Remember that the market waits for no one and it deserves your complete attention. While you’re busy cheering for Andy Murray in the Australian Open, you might end up missing market signals. Even worse, you could end up with big losses because you were preoccupied by the latest Game of Thrones episode and missed your cue to exit.

Luckily, there are ways to limit distraction. For example, you can restrict the websites that you visit during your trading hours, or inform your friends and family not to disturb you while you’re trading.

3. Confidence issues

You win trade after trade after trade, and soon you feel like Midas – everything you touch turns to gold! But unfortunately, you get drunk on your success, and before you know it, you’ve ditched your trading plan entirely. You start getting sloppy, make bad trading decisions, and your trading performance takes a nosedive.

It’s not uncommon to feel confident after a streak of wins, but it becomes dangerous when you become Overconfident. Being overconfident may cloud your judgment and lead you to do things you normally wouldn’t, things that go against your trading plan. It could make you take invalid trade setups, risk bigger positions, or leave a losing trade open longer.

Likewise, a lack of confidence as a result of a string of losses can lead you to abandon your plan as well. Being haunted by the fear of defeat can make it more difficult for you to “pull the trigger” even when you see a valid setup. Lack of confidence may also manifest itself in other ways, like closing a winning trade earlier than you should because you’re afraid of losing gains

The trick to avoid being carried away by a streak of wins or being bogged down by a string of losses is to always remember to take things one trade at a time. If you devote all your attention to the trade at hand, it makes it easier to clear your head of past successes and failures.

4. Fatigue

It isn’t hard to lose your concentration when you’re physically and/or mentally exhausted. Have you ever tried studying for a test after a hard night of partying? College students know what I’m talking about – it’s a recipe for disaster!

When you’re fatigued, you’re not as sharp as you normally are. Often, this leads to slower reaction times, and your mind may not process things as thoroughly. These, in turn, can lead you to deviate from your trading plan and make bad trading decisions.

The solution to fatigue is simple. Take a break and get some rest. You won’t do your account any harm by stepping away, but you CAN do damage by trading when you’re not 100%.

Source: babypips.com

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