Is Trading Stressful?
Is trading stressful? The simple answer to this, is yes trading can be stressful but it doesn’t have to be. Learn how to manage your stress levels with the right knowledge and tools and you will drastically improve your trading. As with anything in life, to become good at trading takes time, patience and persistence; you will hit obstacles on the way, and many of these can be self-imposed so it is imperative you always strive for self-improvement.
The markets are unpredictable at times and when you are risking your own money, this can be stressful. A trader can be ‘their own worst enemy’ when trading and can be tough on themselves. For example, when you lose a trade, it can affect your trading confidence and lead to bad trading decisions; it’s a vicious circle. Every trader wants every trade to be profitable but this is not realistic, you will win some and you will lose some. Stress is caused by many emotions including fear and greed. A common mistake made by traders is holding onto a losing trade with the hope that they can recover their losses and make it a winner. Psychologically this is when greed and ego come into play; nobody wants to be seen as a loser. In comparison, if we see a trade bringing in profit, we may choose to close out the trade too quickly with the fear that it could potentially become a losing trade if we don’t.
Lee Sandford, qualified trader says, “I lose on plenty of trades. No one can win every trade they place. But I’m not just a loser in trading, I’ve been a loser in life, and I’m proud of the losses I’ve been through. When you lose, you learn and that’s an important part of your psychological development. The biggest winners have lost the most times.“
With this in mind, we have compiled a list of our top 3 ways to deal with trading stress.
1. Manage Your Mindset
As mentioned above, emotion plays a big part on trading. We believe that trading is 20% knowing your strategies and making good choices and 80% having the right mindset and psychological approach. The way you think and behave will always have a massive impact on your trading so don’t let your emotions cloud your judgment. The first step to mastering your mindset is to recognise and acknowledge when you are feeling stressed or negative emotions including fear and anxiety. Once acknowledged, try to observe how you are reacting to this stress; do you feel impulsive or panicked? We suggest you keep a trading journal to take note of how you deal with these situations and what emotions and thoughts you are experiencing. If you feel the need to act impulsively, take a break, step away from your charts and have a cup of tea or go for a brisk walk to clear your mind. The aim is to really get to know yourself and work on self-improvement. Work on clearing your mind, gaining a realistic perspective, focusing on the positives and finally, learning from the negatives. Develop your self-awareness and self-management to find out the reason why you might overtrade and be aware of your desire to be impulsive. Find out what is holding you back, is it your response to the markets or is it your beliefs, perceptions, thoughts, and fears?
2. Have A Solid Trading Plan
Preparation is key. Once you have invested in a decent education, you will be able to prepare a decent trading plan. Create a solid trading plan with a good strategy and realistic goals. You will feel more at ease and prepared if you take the time to do this. Once you have found a strategy, trial it out for a period of time, learn the process, give it a chance and see it through. Don’t move on to the next strategy until you have made consistent profits from your first strategy. Follow your strategy to the best of your ability and you will make money. Trust your plan and don’t let your impulsions or emotions steer you away from following your strategy. Traders tend to live off their last trade, but remember that this one trade isn’t going to define your entire trading career. In your trading career, you will be placing lots of trades, don’t let one losing trade define you. Real winners know how to lose, learn from their mistakes and move forward. You have to be able to follow your trading plan and strategy, let go of the market and trust yourself. Get good at following a set of rules and processes to the best of your ability.
3. Have A Good Routine
Incorporating a routine will allow you to have better control of your day and start your trading day off right. You can kick-start your trading day by having a set of practices you follow to help manage stress, strengthen your mindset, and increase your focus and drive to meet your trading goals. It will also help promote confidence. We recommend you start your day with exercise to boost your feel-good hormones, or you could focus on wellness by meditating or having quiet time. Always start your day with a healthy breakfast to ensure you have a productive trading day. To start your day of trading, write a list of your goals to encourage your productivity and create structure. This will help you stay focused on achieving your goals. Lastly, prior to starting trading, eliminate any distractions to help improve your concentration.
Find out what is causing you stress during trading, find a way to eliminate it and you will start to see consistent profits.