Trading with Scared Money

New traders often start out trading with what is known in the trading community as trading with scared money. This might not the best way to start trading and its often one of the reasons traders never get far. Let’s delve in.

What is Scared Money?

Why You Shouldn’t Trade with Scared Money:

Trading is difficult to begin with. When you bring scared money to the table, you make it even more difficult. Because trading with money you can’t afford to lose will:

• make it hard for you to stick to your stops.
• make you take profits earlier than intended.
• make you blame your strategy for losses and will make you strategy hop.
• increase your stress levels (while trading and outside of trading).
• make you FOMO (fear of missing out) into trades because you’ll have a need to make money.
• leave you off worse than when you started, that’s if you lose your trading capital.

I can go on, but I’m sure you get the idea… trading with scared money will put unnecessary pressure on you, pressure you can do without in an already difficult game.

Why do We Trade with Scared Money?

When we start out on our trading journey, chances are we don’t even know what scared money is. For many of us we stumble across trading because we are looking for a side hustle or we get introduced through social media.

Very seldom is there someone to guide us. And because making money is only a couple of clicks away, common sense is often lost. So we start trading with scared money because:

• we honestly don’t know how hard trading really is.
• we have the need to prove ourselves to others.
• we know how hard trading is, but we think we are special, that we are going to be different than the other failed traders (this was the case for me).
• we are so desperate to make money (whether it is because we hate our boss, hate the 9 to 5, because of debt or whatever ) that we are totally ignorant of the possible negative consequences.
• our dreams (the girl /boy, car or house we want) are so big, it overshadows the reality of trading. It makes us rush into things.
• when we are new to the game, it’s easy to get influenced / convinced by others. Examples are the promotion of “supreme” signal services, courses and mentoring services.
• we live in a world of instant gratification.

What is the Right Thing to Do?

No matter what you’ve heard in the past, trading is risky. So don’t trade with scared money, don’t trade with money you can’t afford to lose. Trade only with money you can afford to lose.

If you don’t have money to trade with, its best to wait until you do. There are many things you can do to prepare for live trading, like:

• start saving for your trading stake.
• finding ways to make extra money to build your trading stake.
• researching different trading courses and mentoring services.
• researching what trading style and instruments are right for you.
• back testing your strategy or trading it on demo.
• curating the best people / traders you want to follow on social media.

I know the above is not sexy , easy or what you want to hear, but it will most certainly put out on the right track.

Finally:

Having patience and discipline is key to becoming successful in trading. It will come up as advice in most of the things traders struggle with. The same is true when it comes to trading with scared money.

Don’t be in a hurry to start trading, it’s not going anywhere. Be disciplined enough to to acquire the skills needed for successful trading, all while saving for your trading stake.

Thanks so much for reading and all the best with your trading.

Thanks and Regards,

Trading SOS SOS