Scared money

“The best traders aren’t afraid.” 

Mark Douglas, Trading in the Zone

“The brain is hardwired to prevent you from interfering with its fear circuits, its core defensive and reactive processes. Unfortunately, in trading this means you will feel much more fear than necessary.”

Kenneth Reid, Ph.D

You have probably heard professional traders warn about trading with “scared money.” According to Mark Douglas, writing in The Disciplined Trader:

“In the market, the fear of losing one’s fortune is every bit as intense as the fear of losing one’s life from an attack by a wild animal. I don’t think I could put the difference between consistent winners and everyone else more simply than this: The best traders aren’t afraid.”

Why is trading so scary? Neurofinance has the answer.


Neurofinance studies the relationship between the brain and money. We now know that trading activates the same primitive centers in the brain that are responsible for self-preservation. These are the primal emotional and defensive layers of the brain that do not respond to will power (self talk). In fact, the brain is hardwired to prevent you from turning off its primal circuits, its core defensive and reactive processes.

You may not remember the details of those painful experiences, but a part of your brain does. That part of your brain (the amygdala) stores details about everything that ever hurt you and tries to avoid those things in the future. The amygdala is a pattern recognition device. It is the size of an almond, but it can recognize 20,000 faces….or chart patterns.

Gradually, therefore, the amygdala adds emotional color to your trading experience in the form of fear. Gradually, you become subtly afraid of the setups you used to take even if you consciously decide that you still want to take them. Each time a setup occurs, you will either miss it entirely or think up a reason why you should not take it. Losses have much more impact on the amygdala than wins. In fact, it does not register wins at all. It only registers things that hurt. The more you trade, the more times you will lose and the amygdala never forgets a loss and who/what caused it. Never.

The good news is that this type of conditioning can be reversed. As a trading coach I specialize in helping traders reverse aversive conditioning. But first you have to know that the conditioning is there, running the show, filtering (distorting) all your perceptions of the market’s opportunity flow.


Normal human instinctual fear, which may be worsened by your genetic makeup, will interfere with trading success because it will make you more reactive to the randomness in the market. Winning traders are either not afraid or carefully manage their fear. Genetics does play a role. There is a gene for “jumpiness,” which makes some people much more senstive to loss or missing out or being wrong than others. There is also a gene for having a cool head. And, there is a gene that helps us be moderately reactive.

To eliminate self-sabotage, you have to reduce your fear to manageable levels. You can’t trade well with a scared brain.

Risk Aversion

Once trading becomes associated with painful experiences, traders come to expect losses and betrayal by the market. Because risk cannot be eliminated from trading, the inability to tolerate risk works against you. It makes you late in pulling the trigger (waiting for confirmation) or makes it impossible to stay in a good trade and let winners run.


Contact me to schedule a FREE 15-Min. CONSULTATION click here to sign up now.To trade successfully, you need to reduce fear to a level where it is healthy, i.e. you respect the reality of risk, but your judgment and behavior are not impaired by fear. My Free Risk Profile is one way to evaluate your susceptibility to fear. My trader coaching program is focused on reducing fear so you can trade rationally.

If you take no other action today my friend, be sure you order my Positive (+) Neuroprogramming MP3 TRAINING A WINNING MINDSET. Nothing is more important than becoming proactive about your mental-emotional state while trading. It could save you thousands!

Kenneth Reid, Ph.D