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The Spiritual Side of Trading: Fear, Feelings of Inadequacy — Lack of Courage or Self-Confidence

 

As a trader, what kinds of fear do you have? Are you afraid of losing money? Are you afraid you will miss a move? Are you afraid of losing face? Are you afraid to face who you really are? Are you afraid of disapproval by your mate, relatives, or friends? Are you afraid that trading is sinful?

The Bible has a lot to say about fear.

"An anxious heart weighs a man down..." (Proverbs 12:25, NIV).

We regularly hear from traders whose fears place them in a state of anxiety. Traders constantly send us questions and statements that reflect their fears. Perhaps you do not realize the many ways that fear expresses itself. For example, a question we frequently receive is: "Can I make a living trading?" Now turn that question around and it really says: "I'm afraid I might not be able to make a living as a trader!"

Sometimes the fear is expressed as a statement: "A good trade comes along and I can't make a decision. I sit there paralyzed." Turn that statement around and it says, "I'm afraid to make a decision that could end up hurting me."

Take a look at some of the questions we receive. Then turn them around and you will see the fear, anxiety, and doubt. Here are two more examples:

  • "Is it possible to be a really profitable trader? (I'm afraid it's not possible"...etc.)
  • "I hesitate when I know I really should go short!" (I hesitate because I'm scared"...etc.)

Go ahead! Try it with these other questions and statements that derive from fear.

Questions that come up:

  • "Is it possible to be a consistently profitable trader?"
  • "Is it true you can get rich trading?"
  • "Is there really collusion among the market movers?"
  • "How can I be sure trading is right for me?"
  • "Just how risky is trading?"

Statements that arise:

  • "I feel as if the market is out to get me."
  • "My confidence is low. I can't pull the trigger on a trade."
  • "I panicked on my last trade."
  • "I can't seem to relax when I trade."
  • "I feel like I'm out of control."
  • "I hate to lose."

I could go on and on with these, and I'm positive I didn't list many that you can think of. What I want to concentrate upon here is what the Bible says about fear and, most of all, how the Bible says you can cure it.

One wholesome and constructive way to deal with fear is to look to God for deliverance from your fears.

"I sought the LORD, and he heard me, and delivered me from all my fears." (Psalm 34:4).

What this is saying to those willing to believe it, is that if you seek God in prayer and tell Him your fears, He will help you to see from where they are derived. God will not just simply remove them; rather, He will reveal to you where your fears are coming from, including the flaw in your character that allows you to be afraid, or the emotions you are suppressing that are holding you in bondage to fear.

"Do not be anxious about anything, but in everything, by prayer and petition, with thanksgiving, present your requests to God. And the peace of God, which transcends all understanding, will guard your hearts and your minds...." (Philippians 4:6-7).

The quote above is actually a formula for getting rid of fear. But there are other things you can do. Elsewhere the Bible says that pride precedes a fall. So you must avoid being prideful in your trading. Check it out:

"Humble yourselves, therefore, under God's mighty hand, that he may lift you up in due time. Cast all your anxiety on him because he cares for you." (1 Peter 5:6-7) (Also see Psalm 55:22-23)

The possible causes of anxiety and fear are many: conflict, health problems, dangerous situations, death, unmet needs, spiritual problems, false beliefs, etc.; but for traders, it is the unpredictability of price movement that brings about the greatest amount of anxiety and fear.

According to the Bible, there is nothing wrong with realistically acknowledging and trying to deal with the identifiable problems of life. To ignore danger is foolish and wrong. But it is also wrong, as well as unhealthy, to be immobilized by excessive worry. Such worry must be committed in prayer to God, who can release us from paralyzing fear or anxiety, and free us to deal realistically with the needs and welfare both of others and of ourselves.

Here are some general, common sense suggestions for those weighed down with fear, anxiety or worry:

LAWLESSNESS IN YOUR LIFE — Sometimes fear and anxiety are the result of your own failings and guilt. If you have committed a wrong or done anything bad, your fear and anxiety is probably from God and your own conscience trying to get your attention. You need to make some changes, confess to yourself and to God what you've done wrong, seek God's forgiveness, and set it right. There is a balance in this. God is a loving and forgiving God, although He is also a righteous God. If you have been raised in a "hellfire and brimstone" "God is going to get you" religious atmosphere, you may need to study the Bible to discover the true nature of God. You may be carrying around an unnecessary burden of guilt (leading to fear) trying to atone for your own sins instead of turning them over to God in faith.

SLEEP — Humans generally need 7 to 9 hours of sleep per day. Sleep deprivation can increase anxiety. Get enough rest. If you cannot sleep, you may need to seek God's help, and perhaps that of a health counselor or a physician.

BE MORE REALISTIC — Many people are worried and anxious about events that will never actually happen to them. Relax. Focus on today. Take life one day at a time. Take your trading one trade at a time. When trading, focus your attention on the "now." Do not become distracted by thoughts of other things.

LISTEN — to relaxing, soothing music. There is some great music available, classical and modern, that can help you focus on God and leave your fears and worries behind. It may also help to listen to uplifting, encouraging speakers and teachers.

FUN — If at all possible, do something that you enjoy. It is good to get some recreation on a regular basis. Take a break. Get your mind off your fears and worries, and have some fun. Get away from the markets and your trading screen. Don't become a day trading zombie glued to a computer screen all day. Get a life!

TALK TO SOMEONE — Don't hold all the anxiety inside. It can be a big relief to share your fears and worries with someone else — a spouse, a friend, relative, pastor or counselor. If fear and anxiety are ongoing problems in your life, schedule a regular time each week to talk with someone. That someone can also be God.

TAKE ACTION — If there is something practical and wise that you can do to alleviate the problem or avoid needless danger, take action. Don't put it off. Procrastination will generally raise your anxiety level. Also, regularly spend some time being concerned with other people's problems, especially those of family, friends, and others in the community. This can often help other people, and give you a sense of perspective on your own problems.

EXERCISE — Medical studies show that exercise can help lower anxiety. If you are healthy enough to exercise, try it. Regular brisk walks, running, swimming or other exercises can be real stress reducers.

PROFESSIONAL HELP — There are various organizations which provide help for people with anxiety attacks, including the Midwest Center for Stress and Anxiety (stresscenter.com) which provides self-help. You can search for information and assistance on the Web using keywords such as: anxiety, panic attacks, agoraphobia. You should be able to find local help by consulting your pastor or physician.

GOD'S METHOD FOR GETTING RID OF FEAR — The Bible states that LOVE drives out fear. How can we apply this simple statement to our trading?

On the human level, the only way you are going to "love" anything is if you receive goodness and kindness from whatever it is you learn to love. Love is something learned through positive experiences.

However, most aspiring traders do not experience kindness from the markets. Instead they are treated rather cruelly. Losses hurt. Loss of face and loss of money lead to a loss of confidence, both in one's self, and in what you are doing. Therefore, the only way you can learn to love trading the markets is to make sure you have positive experiences with them. What is needed is the courage that comes from conviction.

Courage of conviction requires patience and diligence. The Bible says, "The hand of the diligent makes him wealthy." But what do we see among aspiring traders? We see exactly the opposite. Instead of patiently and diligently searching for what truly works, wannabe traders rush into the markets. They are in a hurry to "make money." How many do you know who are willing to sit quietly and study the markets for perhaps as much as a year, searching to figure out how it all works?

By searching, I don't mean reading lots of books, some of which tend to present the agenda of someone who never actually made it as a trader. By searching, I don't mean sitting for hours backtesting with some indicator. At best, all you can learn from playing with indicators is how the indicators work. What you really need to know is how the market works. You need to know what causes prices to move.

There are many types of fear that can plague traders. 

  • The fear of missing a trade
  • The fear of losing money
  • The fear of being wrong
  • The fear of losing face with peers
  • The fear of criticism

There are more than just the ones shown above.  What can you do about fear?  What steps can you take to overcome it?

The possible causes of anxiety and fear are many: conflict, health problems, dangerous situations, death, unmet needs, spiritual problems, false beliefs, lack of self-confidence, lack of faith in the way you have chosen to trade, etc.; but for traders, it is the action of price movement that brings about the greatest amount of anxiety and fear.

We need to create a consistent routine that will enable us to execute our trades according to plan, and without hesitation even after experiencing a string of losing trades. Trading is a business of following rules.

  1. Planning. I believe the most important single factor in eliminating fear in trading is for a trader to define and operate from a well-thought out trading plan.  If you are not following your plan or if you don’t have one you will experience the horrors of the market the end result of which will be fear.
     
  2. Quick exits when wrong.  You should have a clear idea in mind of what you expect from price action upon entry into a trade.  If you don’t soon see what you were anticipating exit the trade.  Never trade when there is any doubt in your mind.
     
  3. Use a time stop.  Hand in hand with “when in doubt don’t trade,” is the use of a time stop.  If your trade fails to meet your objectives within a certain period of time, exit the trade—win or lose.  There are two ways to be wrong in a trade.  The most thought of way is that of being wrong about direction.  But what about being wrong in your timing?  Doesn’t that count as equally important?  How many times have you been in a trade, been stopped out with a loss, only to see the trade then move strongly the way you originally anticipated?  You were correct about the direction.  You were wrong about the timing.
     
  4. Don’t overtrade.  Don’t overtrade your capital and don’t overtrade your time.  Trading too big—risking more than you should leads to losses and fear.  Trading too often does the same thing.  No one forces you to trade all the time.  Never feel you must trade and never feel you must trade all day.  Trading that way borders on addiction.
     
  5. Be sure to pull the trigger.  Here’s a little trick I have used with traders who had trouble “pulling the trigger.” Bring up an intraday chart of the market you want to trade. Blindly buy it and turn right around and sell it.  Do this repeatedly (buy and sell) for 30 minutes to 1 hour.  When you finish see what the monetary results would have been.  In most cases, you will never again be afraid to pull the trigger. You can do this with real money or on a simulator.  Your choice.  I prefer you do it with real money.
     
  6. Be humble. Wisdom indicates that pride precedes a fall. So you must avoid being prideful in your trading. Show humility instead of shooting your mouth off to others, keep your own counsel.  Instead of letting the whole forum know about the great trade you made, be humble and teachable. Then you will not have to fear being wrong, losing face, or feeling shame. You will never know it all. Keep an open mind and hold your opinions to yourself unless they are requested by others.
     
  7. Be aware that trading is dangerous.  There is nothing wrong with realistically acknowledging and trying to deal with the identifiable problems of life. To ignore danger is foolish and wrong. But it is also wrong, as well as unhealthy, to be immobilized by excessive worry.
     
  8. Keep your focus. Fear limits your focus, and this is particularly true in trading. One of the great ironies of fear is that we tend to bring the very thing we fear upon ourselves. Thoughts can create reality; thoughts charged with an emotion such as fear can realize the dreaded possibility with an amazing speed and effectiveness. What happens if you fear loss when you're trading? You’ve got it! You lose.
  9. Get rid of unnecessary baggage.  If you have been told by parents, siblings, friends, relatives, teachers, schoolmates, or anyone else that you are no good—not a worthwhile person, someone who will never amount to anything, or if you have been raised in a hellfire and brimstone "God is going to get you" religious atmosphere, you may need to stop believing those things and consider your self-worth.  Each of us is a unique creation and all of us have value. Do not allow yourself to carry around an unnecessary burden of guilt (leading to fear) trying to atone for what others have told you. People, especially young children can be viciously cruel.  You may not even remember what was said—the names you were called. You may have buried bad memories deep inside.  Dredge them out, face them, and deal with them.
     
  10. Study the markets. Studying the markets will eventually bring understanding. Understanding will, in turn, bring success. Success will bring rewards, and suddenly the market will be to you what it actually is: an impersonal arena in which those with understanding get paid to trade. With understanding, you will trade wisely. With understanding, you will see how simple trading can actually be. With understanding, you will garner money from the markets. With the successes you have in the marketplace, you will develop the courage of your convictions. Because trading will give you pleasant experiences, rather than fear.
     
  11.  Realize you don’t know the future.  Let’s face it, you can’t tell me with absolute certainty where the next tick will be. You truly do not know what is going to happen next.  Trading is based on probabilities. Sticking with the probabilities is what makes us successful in the long run. Do not overly focus on a single trade. Over-focus causes levels of fear to rise.  You will become overly cautious. You will hesitate. You will try too hard to avoid mistakes.  You will probably lose.
     
  12.  You won’t win every trade.  The problem of fear is made much worse if you enter every trade with the "expectation" that it should be profitable.  Be aware! After several winning trades, the feeling of invincibility supersedes being logical. This can lead you ignore a successful strategy and into trades that you normally would not have entered. Finding good trades is "only" accomplished by sticking to a proven plan. But finding poor trades, and ignoring your trading plan, seems to get much easier after a couple of winners. Never mistake genius for profits derived from your trading strategy. Genius loses money. Trading plans make money.

Studying the market itself will eventually bring understanding. Understanding will, in turn, bring success. Success will bring rewards, and suddenly the market will be to you what it actually is: an impersonal arena in which those with understanding get paid to trade. With understanding, you will trade wisely. With understanding, you will see how simple trading can actually be. With understanding, you will garner money from the markets. With the successes you have in the marketplace, you will develop the courage of your convictions. Because trading will give you pleasant experiences, you will begin to love trading; and with love you will no longer have fear.

However, don't confuse love with addiction. Many traders who are often losing, having one bad experience after another, often for many years running, say that they love trading. What they really mean is that they have an addiction. The addict may hate what he/she does. But they cannot stop what they do because they are addicted to their habit. The addict lives in fear, often admits hating the habit, but continues to engage in the addictive behavior despite the fear and pain it brings. If that is you, there is a source of help — help from a power greater than your own. You will find that power and help when you seek God. The Christian Bible says it this way:

"Now may our Lord Jesus Christ Himself, and our God and Father, who has loved us and given us everlasting consolation and good hope by grace, comfort your hearts and establish you in every good word and work" (2 Thessalonians 2:16-17).

The following is the course I followed to overcome fear:

BIND THE SPIRIT OF FEAR FROM YOUR MIND!

One of the first things that attacks your mind when, you face any financial crisis or decide to trade the markets, is the satanic spirit of fear.

When unexpected situations arise; bad fills, mistaken entry in the wrong direction, a sudden explosion or melt-down of prices that catches you going the wrong way, or order entry errors that cost you money—any of these can happen and when they do fear begins to torment your mind.

You face fear of losing money, losing face, missing a trade, having insufficient funds in your account to be able to have staying power in the market.  You face fear when the thought of losing the money that you worked hard to accumulate might put you in a position where you are unable to take care of basic necessities for yourself and your family: food, clothing, housing and transportation.

You face fear of losing your income and having no way to provide for yourself. You face fear of losing your home, going bankrupt and having no place to live.

To reap God's provision in your time of fear you must know how to bind the satanic spirit of fear that keeps you from acting in faith upon the promises of God.

Satan will bind you with fear until you no longer look to God to supply your needs and you begin to lock up inside. He uses fear to stop you from giving to others and thereby blocks the flow of God's blessings.

To survive during any trading crisis, you must know how to bind the spirit of fear and worry from your mind. As I said above, the spirit of fear is a tormenting spirit that will bind you and keep you from acting in faith on God's promises.

You do not have to be bound or defeated by fear ever again:
"For God has not given us the spirit of fear; but of power, and of love, and of a sound mind." (The Book of 2nd Timothy, Chapter 1, verse 7). Fear has no place in your life! You must recognize the spirit of fear the moment it attacks your mind. You must know how to reject it before it has a chance to enter in and take root.

Take authority over the spirit of fear and command it to go in Jesus' name! If you have accepted Jesus you have the power not Satan. His power was destroyed at the Cross. The Book of 1st John, Chapter 3 and verse 8 says:

For this purpose the Son of God was manifested, that he might destroy the works of the devil.”

When you accept Jesus as your savior, God gives you power and authority, through the Holy Spirit, over all the power of the enemy. Jesus said:

Behold. I give you power to tread on serpents and scorpions, and over all the power of the enemy, and nothing shall by any means hurt you.” Serpents and scorpions refer to devils and demons. God is love, and the Bible says that perfect love, the kind God has, casts out fear. If you know you are loved by God, then you will have no fear.

When you are in Christ, you have one living within you who is far greater than Satan and every demon in hell.  “…because greater is he that is in you, than he that is in the world.” He who is in the world refers to Satan, the devil. If you are in Christ you have the power! Use the authority God gives you to command the spirit of fear to go and never return. You can actually say the following words:

“Spirit of fear, in the Name of Jesus, I take authority over you. You are off limits! God has given me a spirit of power, love and of a sound mind. I bind you and command you to stop tormenting my mind. In Jesus Name, I command you to take your hands off my mind and leave now.”

Derivative transactions, including futures, are complex and carry a high degree of risk. They are intended for sophisticated investors and are not suitable for everyone. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, and all of which can adversely affect actual trading results. For more information, see the Risk Disclosure Statement for Futures and Options.