Trading Stress – Forex Academy

Forex can be stressful, it’s one of the things that are told to us over and over again especially when things are going the wrong way, but does it need to be stressful? There are things that we can do that help us to reduce the amount of stress that we are put under and ultimately to show us that forex trading really isn’t anything to be stressed about.

Why can it be stressful?

It is important that we understand why trading can be stressful and in the right situation, it can be very stressful. Each and every person will have different feelings and will have different reactions to how the markets are going and also how their individual trading is going. Stress often comes from losses, when we lose it is not a nice feeling, as soon as we take a loss we have lost a bit of our money, money that we like. If that money is money that we actually could not afford to lose, then the stress levels will continue to rise further. For many stress can also come upon us when a trade is in the red, we can see it going the wrong way and this can cause us to worry that we will lose some additional money. Stress can come at any time and so we need to work out how we can work through it and help to reduce it.

Use proper risk management.

Risk management is the cornerstone of any strategy, it is the foundation that is there to basically protect your account. It is there to ensure that you do not lose more than you want to with each trade and ensures that you do not blow your account. When you have it in place it can help to take out a lot of the stress from your trading. Of course, the opposite is also true, if you do not have proper risk management in place then every single trade that you make will have the chance of blowing your account. If You are in that situation every trade then you will be under constant stress every time that you trade. This is why you need things like trading rules, dictating how and when you trade, stop losses to help protect your accounts, and a proper risk to reward ratio, that dictates the maximum loss and profits that you will make with each trade. Knowing the maximum that you can lose on each trade can really help you to stop stressing about them, as you already know how much you could lose.

Take regular breaks.

At times it will be impossible to prevent any stress from building up, so then we will need to try and deal with it. One of the best ways to do this is to simply take a break, breaks are a fantastic way for us to reduce our stress levels. Getting away from what is causing the stress is the first step, it will prevent any new thoughts or new stresses from being added to the equation. Secondly, being away and doing something else will help to take our minds off of things that are already causing us stress. This way we think about something rose, something else that gives us enjoyment or at least doesn’t add to the stress. Doing this regularly can help you to regulate the stress that you are under. Do this regularly, multiple times a day, it is even a good idea to do it even if you aren’t currently experiencing stress. Just ensure that you are not sitting in front of the computer for hours and hours without any breaks. Coming back with a clear and calm mind can really help you to improve your productivity and trading results.

Ensure we trade with money we can afford to lose.

The golden rule of trading and investing, only to trade with money that you can afford to lose. It remains true in this situation too and is certainly a way to help prevent certain stresses that you would otherwise experience. Think about it, you deposit some money that you actually need for your rent as an example, how would you feel as a trade goes into the red? You will be in a constant state of stress and panic, you are about to lose the money that you need for your rent and you won’t be able to say it this month. Why would you put yourself under that? Reduce or completely remove that level of stress by only trading with what you can afford to lose. If it will affect your life, do not trade with it. Also do not borrow money or take a loan in order to trade, that just puts you in debt and you will end up owing a lot of money should things go the wrong way.

Understand that losses are a part of trading.

Losses are a part of trading, a big part of them, every single person that has ever traded (apart from those that only do a single trade) will have experienced losses, all of the most successful traders in the world have experienced losses and a lot of them. In fact, they are so much a part of trading that we factor them into our trading through our trading strategies and risk management. Ever heard of the risk to reward ratio? This is where we decide how much we will risk with each trade and how much we want to win. Knowing this means that we know exactly how much we might lose with each trade and that each trade is actually a fantastic way for us to learn from what we have done and for us to improve. Look at why the trade lost and what we can do differently.

Those are five of the reasons why you should stop stressing about your trading. We understand that trading can be stressful, of course, it can, anything to do with money can be. It is important that we do what we can to reduce those stresses, if things get too stressful it can make us want to quit entirely, so try and include and think about the things that we mentioned above, it will help you to be calmer when trading and in the long run will enable you to be a much more successful trader.

Stress is a powerful emotion and it is not one that will shy away from forex traders or any other traders, in fact, it can take a hold of us no matter what it is that we are doing, even something as simple as making a sandwich. You sometimes see those people who never experience it, and generally, we hate it, but what we see is not always the truth, just because we do not see them reacting to stress in the way that we expect, it does not mean that they are not experiencing it.

People can develop ways to deal with stress, so while it may not seem like they are experiencing any, they actually are, they just are able to deal with it. It is important that you are able to deal with your stress levels, if they manage to get too high it can potentially cause you to make rash and irrational decisions which could then be detrimental to your overall trading strategy and profitability. Everyone deals with stress in different ways so it is important that you work out the way that you will be able to deal with it.

We are going to be looking at a number of different ways that people can help deal with their stress, some may work for you, some may not, but they are certainly effective for some.

The first thing that you need to be able to do is to acknowledge and accept that you are experiencing some stress, the earlier that you are able to do this the better. Admit to yourself that you are feeling stressed, anxious, or that things are just simply too much for you. Once you are able to accept that you are experiencing stress, you will then be able to begin to work on getting over it or controlling it. Think about the last time you felt stress, what did you experience? Some people have a faster heart rate, some people get headaches and some people begin to sweat. You need to understand your signs and how they manifest themselves if you are going to be able to recognise stress and then acknowledge it.

You then need to accept that you are experiencing these emotions, just because people have seen the signs, does not mean that they want to accept that they are going through it. Some people like to suggest that they do not experience stress, they never have before but that is simply not true, some people like to believe that they do not, they like to allow others to believe what they do not, but they most certainly do. Accept that you are going through it and you will be able to offer a better deal with it instead of keeping things inside and letting them grow.

If you feel that you are going through some stress or can feel in building, then it is important that you stop trading when going through these emotions can lead to some very rash decisions that could potentially put your account in danger. Stress can make you throw whatever risk management that you have out of the window and to put on larger, more risky trades, not something that anyone should be doing.

Take a step back, there is no harm in stepping away from the computer or your trading station when you are feeling these emotions. In fact, it would be recommended. Take a break, be it 5 minutes, 10 minutes, an hour, or until the next day. Go outside, go for a walk, all of these things will help you to clear your mind and to get a fresher look at the markets. Taking your mind away from the thing that is causing you the stress is the best way of reducing it, of course, then simply coming back can simply bring on the stress again, so there need to be ways for you to be able to control them and to know exactly what it is that is causing the stress.

The next and one of the most important things that you need to be able to do is to identify what it is that is causing you to stress, the sources of your stress. The sooner that you are able to work out what it is that is causing you the stress, the sooner that you will be able to avoid it or to eliminate it completely.

The problem is that it can be quite hard to actually work out what it is that is causing you the stress, due to this it is important that you take a journal. You were probably told to create a trading journal, what you need to do is add a little section to it where you can indicate your current feelings, every time that you are feeling a little stressed, write it down, you will then be able to use this to see any patterns. Maybe you are feeling it each time you have a loss, each time the markets go against you, or if a certain someone comes over to visit and distracts you from your trading.

If you are able to notice and pinpoint a trend or a reason as to why you are getting stressed, you can then look at ways to reduce or avoid it. Some things like losses cannot be avoided, but you are able to train yourself to have a better understanding of your overall strategy, losses should be a part of that and how to deal with them. If it’s a person interrupting your trading, then, ask them to not come during your trading times. There are little things that you will be able to do, and it is important that you understand what they are.

You won’t be able to remove every source of stress, that would be impossible, and some levels of stress can actually be good for you and can help you to concentrate more, but the most important thing is that you get an understanding of what the sources of your stress are, this way you can manage yourself to not allow those stresses to take over your trading. Try to avoid trading stress and you will be able to be a calmer and ultimately more successful trader.