By Admiral Markets
Dear Traders,
Are you tired of pulling your hair out due to stress?
Have you ever broken a sweat while trading?
The losses won’t stop coming.
The days seem to be getting shorter and shorter.
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Your work and family responsibilities are there to remind you that trading should not be the only thing on your radar.
I bet you have felt this at least once during your trading career, right?
Trading is definitely stressful, so we traders should strive to keep our stress levels under control.
The idea of losing real money in a Forex trading may lead to frustration and even worse, anger aimed at yourself or the markets.
Spiral of emotions
Trading can be a grind.
In order to trade properly, your emotions should optimally stay optimistic.
When you start making profits, your emotions will reach the stage of enthusiasm and passion.
Think of it as price action.
As soon as the price touches resistance, you should think about either booking your profits or protecting your trade.
The same happens with the emotional guidance scale.
When you feel very excited about the trade and profits, you should think about exits or protecting your trade (scale out).
Many traders simply ignore the emotional scale, become greedy and make newbie mistakes instead of making profits.
One of the typical mistakes is also trading new setups, when you’re at the stage of euphoria.
Trading under these circumstances will do more harm, because you trade emotions not the price.
Some traders believe that making money calls for home-run trades.
Maybe they have a friend who bought something for $50 and sold it for $500.
Traders love to talk about their home-runs, while forgetting to mention their strike-outs.
They can still wish for a lottery trade that will mean early retirement.
But this is a trap.
Things that position traders for big wins:
…may also expose them to big losses…
…and it usually happens when they experience euphoria.
Optimal emotional level
Making a trade while being optimistic will:
- make you feel good when you make profits; and
- in the case of a loss, it won’t suck you into a spiral of doom.
The worst thing you can be is pessimistic.
If it happens, you are one step closer to the negative emotional spiral.
Remember, you need to think about it in terms of price action.
Boredom is a negative spiral resistance and contentment is a positive spiral support.
Whenever you feel losing a trade, don’t ever let your emotions break the support.
Breaking support, will lead you into the negative emotional spiral.
As price action goes against you, your emotions are breaking the support and going lower down the negative spiral.
If you don’t react and stop falling, you will invariably become trapped in a spiral of doom.
Spiral of doom
As you can see in the above video, it’s critical not to be caught in this vicious spiral.
It is easier to fall into the spiral than it is to get out.
If you don’t learn to stop the bleeding (i.e. stop losing money in a rapid, downward, account-draining spiral), I can almost guarantee that you will blow out your account.
And if happens, you’ll be left staring at a zero balance and wondering how it happened.
These kind of mistakes could cause you a lot of damage.
The damage can kick off a wave of negative emotions:
…that spiral into bigger and bigger consequences…
…and wash you right out of the market with empty pockets.
The leading causes of the spiral are:
- not cutting your losses short
- trading without a stop loss
- unable to admit you were wrong
- not respecting your daily risk limit
- revenge trading.
The final and most devastating effect is the stress.
Your emotions are one of the worst things you can bring to the financial market.
If left unchecked, they can destroy your hard-earned progress in seconds.
Don’t just focus on mastering your trading strategy – learn to master your mental and emotional strength to reach the ultimate level of discipline.
Those who only talk about managing the portfolio, clearly lack the proper experience in Forex trading.
They forget that you do not only manage your profits and losses, you also manage your stress.
In the video below, you can learn how to reduce stress and trade relaxed.
Additionally, you should start giving yourself positive vibrations each day.
It doesn’t have to be something big.
It can be just saying to yourself, “I am good” or “I feel good”.
This way, you supercharge your brain with positive emotions that help increase your focus, memory and awareness.
Ever noticed how you get better at doing tasks when you’re keeping it positive?
It’s no different when you’re trading.
Final thoughts
Have you ever become trapped in a spiral of doom?
Is there another way you can deal with the stress?
How do you practice positivity?
Feel free to add your thoughts and experiences in the comments below, as I would love to learn a bit more from you.
Cheers and safe trading,
Nenad
Article by Admiral Markets
Source: How to reduce stress in Forex trading
Admiral Markets is a leading online provider, offering trading with Forex and CFDs on stocks, indices, precious metals and energy.
