Thread: Eliminate Fear by Reducing Risk

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Paralysis of Analysis!!

Fear and greed are BOTH eating up your confidence.

What you are experiencing is called the Paralysis of Analysis.

It is caused by Fear of Loss or Risk Aversion but the fear can be eliminated. You only need to put yourself in a position where the market cannot hurt you in a significant way on any single trade. This is done with a combination of stop losses and position sizing. This combined approach is the antithesis of the opposing psychological factor at work in market participants - Greed.

You will thereby be controlling both Fear AND Greed.

To help you learn the effects which position sizing will have on your account use these tools. They are from the forex project.

Position size calculator:
Forex Position Size Calculator

Risk Calculator:
Forex Risk Calculator



Stop losses must be placed in an intelligent location with regards to support and resistance or your own stops will have an advantage against you and you want them to protect you not work to eat away at your account.



But the bottom line is you MUST have a system.

Read about it, find it, build it yourself... but THEN...

USE IT.

That means follow the established rules without second guessing and without deviation. Then because your system has control and not your emotions you will survive to adjust, test or whatever it is indicating to you.

There are many online articles by expert advisors on diverse subjects, including trading psychology. One pretty comprehensive site is forexface. Check it out.

I checked the site. Are you the owner?