Trading / Investing In Financial Markets

How to Remove your Fear of Losing Money When you Place Trades


Some of the key reasons why Traders become Fearful about losing their Money include the following :


1. They don’t understand that mathematically, over a series of Trades, a Trader can lose a majority of their trades and still be widely profitable, simple math proves this.

2. They are simply fearful of losing money in general.

3. They are trading positions that are too big (risking more than they really should be), causing fear, sleepless nights and huge emotional swings.



Fear of losing money can be a good, natural emotion, but we need to transform its focus .


Fear of losing money is a good emotion to have in many areas of life, if we did not have it there would be even more chaos in the world and in the markets. Humans are protective of their acquired wealth and property, and rightly so; they worked hard for it.

However, in trading, this natural energy to be defensive and emotional with money needs to be transformed and refocused into a different mental state…

Instead of being fearful of losing your money when trading, embrace the control you have on each trade; a trader has complete control over the risk management of every trade via stop losses and position sizing, [and for more advanced traders, derivatives and hedging mechanisms (not discussed here)]. These risk management tools are your way of being in control of your money/funds, and instead of being “fearful” about losing money, you should feel empowered and confident because you can predetermine how much you are comfortable with potentially losing BEFORE you enter a trade by using these tools.


Ask yourself some serious questions ; 


1. Do I really have the knowledge and confidence to be trading with real money in the first place?

2. Am I trading a position size that’s too large for my personal risk profile / per-trade risk tolerance?

3. Do I truly understand the math’s behind trading?



Trust your strategy and Trust the maths


As we can see in the hypothetical track record above, the math shows us that even while losing 57% of our trades, if we let our winners run to around 2 to 1 or better and cut our losses at -1R or less, the profits will take care of themselves. It’s worth noting we included a couple of 1.5R winners, because sometimes it will make more sense to take a reward of slightly less than 2R, depending on market conditions. The average risk reward in this example was 1:1.75, and if you can aim for an average risk reward of around 1:1.5 or 1:2, over the long run you should come out ahead. The “secret” is keeping ALL your losers at 1R or less and ONLY trading when our price action trading edge is truly present.



The fear of losing money or of losing a trade can be crippling to a trader, causing them to miss out on high-probability trade setups, second-guess themselves constantly and it can even cause them to be unable to sleep. Clearly, if we are to succeed at trading we have to conquer this fear. Conquering the fear of losing money and trades starts with acceptance; we have to first accept that we are going to lose money and have losing trades, even if we try to avoid them. Thus, there is no sense in “trying” to avoid losing trades, instead we have to learn to roll with them and contain them. We do this by following through with the concepts we discussed above, so let’s sum them up briefly:

• Manage your money and employ solid risk management; this means cutting losses at 1R or less and aiming for a decent risk reward of about 1:2 on each trade. We also need to try and let some winners run to get larger risk rewards like 1:3, 1:4 or more.

Trust the math: remember the example track record above and that even a 40% win rate can make very good money with an average risk reward ratio of approximately 1:1.5 or more .

Good Trading ,


Bilgehan Tirpanci

Financial Trader




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