So have you already encountered a state where you cannot bring yourself to open a new trade or exit an existing position? This situation is called a trader's block. In this state, a person is often unable to trade on a psychological level. This problem happens to so many traders, especially beginners. Let's figure out what causes this block and how to deal with it.
Main Reasons
Each trader has his own trigger. However, there are two main reasons:
- You have suffered large losses due to one or more trades and are afraid that your further actions will lead to a similar or even worse result.
- You were fortunate enough to make tremendous profits on your trading. Now you are afraid that your luck will go away and you won’t get the same profit or even lose what you’ve already gained.
Whatever triggered your trading block, you need to fight it. Otherwise, your trading career will come to an end. Here are three ways to help you overcome your crisis.
1. Understand Yourself
The solution to any psychological problem begins with its recognition. If you find yourself unable to return to trading, then most likely you have a trader’s block. You need to acknowledge this and start working on it.
Unfortunately, the problem won't go away on its own. The trader's block is caused by fear and the fear doesn’t just go away. You need to sort out your emotions and start working with them instead of trying to suppress them. Instead, take a rational assessment of your psychological state and try to understand what emotions are holding you back from trading.
2. Analyze Your Trading Strategy
Once you've figured it out, take on the trades that triggered your block. A trading journal will help with this. If you still haven't started writing down all of your trades in detail, then fighting the trader's block can become an additional incentive.
If your block is caused by a losing trade, figure out exactly what went wrong:
- Have you followed a trading strategy?
- Have you followed a risk management system?
- Were there any important news releases during your trade? Etc.
If you strictly followed your trading plan, but still lost money then your strategy is the problem. Either it did not work initially or it’s time to adjust it to a new market situation.
If you deviated from your plan, then step 3 of this article will be the solution to your problem.
Profitable trades need to be studied with the same attention:
- If you stick to your plan, then rejoice because it works. Continue in the same spirit.
- If the trade brought profit purely out of luck, then it should be taken solely as luck. Aim for not the biggest but stable profit.
3. Stick to Your Plan
A trading performance of a trader that clearly follows the plan doesn't depend on luck. If you didn’t follow the strategy then the solution to your problem with the trader's block can be a simple checklist with rules for entering and exiting a trade. This way, you can bring your actions to almost automaticity. Little will depend on you so it will be psychologically easier for you to take actions.
If at the previous step you found flaws in your trading system, then you just have to make the necessary adjustments, test it on a demo account and return with renewed vigor to trading with real funds. And I can only wish you good luck with that.