3 Major Causes of Anxiety in Prop Trading and How to Overcome it (2024)

3 Major Causes of Anxiety in Prop Trading and How to Overcome it (1)

One of the biggest challenges some prop traders face is excessive anxiety. Iknow anxiety in trading is natural, but too much of it can ruin prop trading success. As aprop trader, you want to make sure you regulate your stress and anxiety level and stay emotionally healthy as much as you can.

In today’s blog post, we will talk about the major reasons why some prop traders experience anxiety and suggest ways to help you overcome or stop it. Here are three of the most common reasons:

1. Losing streak

A losing streak can be amajor source of anxiety for some prop traders. Some of us may become very anxious if we encounter consecutive losses, leading us to feel miserable and like we are on the verge of losing our account. Although this is avalid reason to be worried, you donot need to overthink it because the situation can still be reversed.

To overcome losing-streak-induced anxiety, you need acombination of discipline and perspective. Here are afew tips to help you fix it:

  • Take abreak: It’s important to take breaks and step away from trading when you’re on alosing streak. Also, meditate if you can. This will help you clear your head and come back to your trading with afresh perspective.
  • Stick to your trading plan: It’s essential to have awell-thought-out trading plan that includes risk management strategies and entry and exit criteria. Sticking to your plan can help you avoid making impulsive decisions based on emotions.
  • Focus on the process, not the outcome: Instead of focusing on the outcome of each trade, focus on the process of trading. Execute your trades based on your plan, and don’t get discouraged by losses.

2. Fear of blowing an account or violating its drawdown limit

The fear of blowing an account or violating its drawdown limit also seems to be adominant cause for worry (sometimes even before some prop traders begin taking trades on anew account). This anxiety causes some traders to close trades prematurely, become too careful, and hesitate when entering trades, leading to missed opportunities and unproductivity. They become limited by performance anxiety and, as aresult, self-sabotage.

To overcome this fear, you need effective risk management strategies and aclear understanding of your trading goals. Here is how to go about it:

  • Set realistic trading goals: It’s essential to have realistic trading goals that align with your risk tolerance and account size. Set clear goals for your trading, and make sure they are achievable.
  • Focus on the long term: Instead of focusing on short-term gains, focus on the long-term goals of your trading. Iguess you know the popular saying, “Trading is amarathon, not asprint.”

3. Trading inexperience

New or amateur traders may experience anxiety because they lack confidence in their trading skills. They may worry that they’re not good enough to be successful or that they’re going to make amistake that will cost them their account.

Here are ways you can overcome the anxiety that comes as aresult of trading inexperience:

  • Educate yourself: Read books, articles, and online resources to learn about trading strategies, risk management, and market analysis. Take online courses or attend seminars to learn from experienced traders.
  • Practice with ademo account: Before risking real money, practice trading with ademo account. This will help you get afeel for the markets and allow you to make mistakes without risking capital.
  • Find amentor: Reach out to experienced traders and ask for their advice. Attend meetups or join online trading communities to connect with other traders who can offer guidance and support.

Anxiety doesn’t have to control you. With these tips, you can manage it and become aproductive prop trader.

3 Major Causes of Anxiety in Prop Trading and How to Overcome it (2024)


3 Major Causes of Anxiety in Prop Trading and How to Overcome it? ›

- Realistic profit and loss tolerances – Use industry averages to set your tolerance levels and don't try to justify any deviance. - Reasonable time horizons – This is key to avoiding FOMO trades and panic buys. Take your time.

How do I stop panic trading? ›

- Realistic profit and loss tolerances – Use industry averages to set your tolerance levels and don't try to justify any deviance. - Reasonable time horizons – This is key to avoiding FOMO trades and panic buys. Take your time.

Why is trading so stressful? ›

Trading can be a highly stressful profession due to the inherent risks, volatility, and uncertainty of the financial markets. It requires concentration, focus, and alertness. But without a sound mind and body, it will be extremely difficult to do any of these things.

How to overcome fear in trading? ›

Visualize yourself following your trading plan with discipline. Visualize yourself how you easily overcome and can control fear. Visualize yourself winning. Imagine the trading day ahead of time will help you feel fearless when it is time for you to trade.

What causes fear in trading? ›

By not having the right trading plan and tolerance towards losing money, a trader can develop a fear of losing money, which can create a fear of entering the market at the right time. Missing the best entry because you doubted yourself could be a crippling habit to fall into.

How to fight FOMO in trading? ›

Stick to Your Plan: Discipline is paramount in overcoming FOMO. Avoid impulsive trading by adhering to your trading plan, no matter how tempting it might be to deviate. Following a consistent set of rules and guidelines can help you stay on the course and resist the urge to make impulsive trades.

How do you mentally prepare for trading? ›

By making sure you allow your stressful emotions to dissipate, your body and mind will recuperate and be ready to deal with extreme levels of stress. Trading is stressful and demanding. It takes psychological energy to cope with the chaotic markets day in and day out.

What is the most stressful trade? ›

Warehousing and storage is the most stressful industry in the U.S. scoring 28.92/100. The data found that 93% of workers reported being paid hourly.

Why do 90% of traders fail? ›

Most new traders lose because they can't control the actions their emotions cause them to make. Another common mistake that traders make is a lack of risk management. Trading involves risk, and it's essential to have a plan in place for how you will manage that risk.

What is the biggest fear in trading? ›


Traders are afraid their order will be filled at a significantly different price than when they placed the order. If this fear is stopping you from trading, try thinking of slippage as a cost of doing business. It's going to happen once in a while.

Is trading bad for mental health? ›

With that said, recent studies have found that there is a correlation between stock market downturns and an increase in hospital admissions for mental illness, an increase in domestic violence, deteriorating mental health among retirees, and increased depression rates.

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