The two great enemies that traders will have to constantly battle throughout their trading careers are fear and greed. Your ultimate success depends on how well you can overcome these two major obstacles.

Fear

Fear is a natural emotion we have that often times protect us from danger but can also impede our success.

The two great enemies that traders will have to constantly battle throughout their trading careers are fear and greed. Your ultimate success depends on how well you can overcome these two major obstacles.

Fear

Fear is a natural emotion we have that often times protect us from danger but can also impede our success. We all fear something, for example I have a fear of snakes and until recently would not go anywhere near them. Two common fears that many traders have is of the unknown and the fear of loss. These two fears go hand in hand and can play a major role in the failure of traders. A question I often get from my newsletter subscribers is how I know that a trade is going to work? My answer is I don’t. It is impossible for me or anyone to predict with 100% the outcome of all trades.

If I knew with 100% certainty the outcome of all trade signals I generate then I would be the richest man alive in short order. There would not be any need for money management rules. I would have a worry free trading career.

Things that can add to your fear are:

1. A recent string of losses
2. Risking too much in the market
3. Financial Stress
4. Family Stress

Before entering the market a self assessment has to be made to determine whether or not you are indeed mentally fit to trade. If you find yourself making a trading plan then when it is time to execute you cannot pull the trigger you are not yet fit to trade.

In order to overcome your fear of losing in the markets you have to do these 2 things immediately

1. Accept that losses will occur- you cannot be right on every trade
2. Reduce your trading contract size to an amount you can be comfortable losing. This may mean that you may even have to trade a micro account losing $1 per trade.

Re-focus your attention on trading your plan as opposed to whether you win or lose on a trade. You will find that if you can stick to a well designed plan you the odds are in your favour to begin making some serious money in the markets.

Greed

Greed creeps in when a trader becomes overconfident in his abilities. After a string of winning trades a trader may start to increase the risk they are putting per trade and overleveraging the account on a single idea. While fear will result in losses, greed often results in traders blowing their entire accounts. I have come across many professional traders with excellent trading systems that totally disregard money management principles that brought them to the top, became overconfident and lost millions.

Traders need to identify when greed is creeping into their thinking and resist it at all costs. The way how to combat greed is to stick to sound money management principles. It is even more important to stick to these principles after you have had success in the markets because more money is at risk. You may have started your trading career with $20,000 but if you now have $90,000 more money is now at stake.

The struggle against fear and greed will be a constant one; your ability to control them will ultimately determine if you will have a mediocre trading career or a superior one.