It’s impossible to completely eliminate stress and anxiety from all aspects of your life. We’re constantly reminded that certain stresses are good for us. The general quotes regarding positive forms of stress we witness constantly regurgitated in the mainstream media, will involve claims that some forms of stress can actually motivate us to achieve targets, to get things done, to succeed. We’re continually reminded that one person’s stress can be another’s tunnel vision, bloody-minded mission.
We’re all individuals and we all react differently to various stressful situations, what some of us classify as stress others will dismiss as irrelevant, small inconveniences. Certain people might become extremely anxious if they’re stuck in a traffic jam, or on an underground system knowing that they’ll be late for an appointment. They’ll walk and talk through various scenarios in their headspace, when a simple, calm phone call as you’re in the jam or when you’re finally on the pavement, will explain the situation perfectly and you’ll generally receive a sympathetic hearing.
During your novice, fledgling trading period, you’ll undergo a barrage of new emotions and feelings as you become accustomed to and familiar with the highly complex business. What separates retail trading from many other stressful activities is the fact that your money is on the line. Whether or not you’re trading a small account or trading big size, the stress (as in many other life issues) is relevant and personal. Someone desperately trying to squeeze €1,000 profit from a €10,000 account each month, if the €10k represents all their savings and assets, will probably feel more emotional pain and stress if they lose in comparison to a trader who has several millions of euros in assets, who is looking for 15-20% account growth per year.
As traders it’s imperative that we recognise when and where stress occurs and develop coping mechanisms for all the eventualities we experience. If you fail to establish what stresses you experience and don’t put remedial measures in place, then the stress and anxiety could have a devastating impact on your trading. One of the most prominent effects could involve the stress ruining your enjoyment of trading, which should be a pleasurable experience. Although you initially entered the industry to primarily make money you also want to enjoy the full process and not approach each trading day with trepidation and high levels of anxiety.
Stress can occur if you’re trying to trade too many securities, therefore, the obvious choice is to concentrate on trading less securities. Why not consider trading the major currency pairs only, or just EUR/USD, or the DXY, dollar index?
Stress can also occur if you’re trading on smaller time frames when you don’t have the necessary skill, experience or means to profit using the appropriate strategies. You can also experience anxiety and elevated stress if you’re risking too high a percentage of your account per trade; lose three trades in series of 2% of your account and you face a considerable uphill battle to recover the 6% loss. If you’re trading off small time frames you could incur this loss very quickly which will add to your stress. Major stress will also be incurred if you’re trading from an under-capitalised base.