Dealing With Stress When Trading

There is no doubt that trading is extremely stressful regardless of how experienced you are. Even professional day traders that have been trading for years experience stress and mental discomfort on a regular basis.

And yes, the risk is a part of trading and the main reason why it’s so exciting, but you can’t let it get the best of you. In fact, we would argue that learning how to deal with stress is essential to anyone that wants to succeed as a trader.

So how do you do that?

Let’s look at some of the best hands-on tips shared by experienced traders.

Always Have a Plan

Out of all the things you can apply to your trading in order to limit stress, having a plan is the most efficient. You see, one of the main reasons people get stressed is because they feel like they don’t have control of the situation.

By making sure you always have a plan and, more importantly, sticking to that plan, you will eliminate a lot of stress factors in your life.

In addition – and this should go without saying – you need to have a defined trading strategy, if you trade without a strategy or a plan, your chances of succeeding are next to none.

Take Breaks Throughout the Day

Most traders trade on their own and are in control of their own time – it’s one of the benefits of trading, but it can also be a curse.

Spending all day staring at charts trying to find the next pattern to trade on can cause tremendous anxiety, and just like with any job or activity, it’s important to take breaks. Just a few minutes away from the screen can do wonders.

If you know that you struggle to take breaks on your own, we suggest you plan them at specific times in advance and set alarms to remind you.

We naturally think that the more work we do the more we get paid which is true if you have a job. However, in trading it’s the exact opposite, we suggest less chart time and less work results in more profits.

Constantly Improve Your Knowledge

The more you know, the less you stress. Therefore, we encourage all traders to constantly improve their knowledge and trading skills.

As mentioned earlier, a lot of trading related stress comes from the unknown, and by preparing yourself properly, you can limit those feelings. Also, getting better at trading means you will improve your chances of making a profit and the more money you make the less stress you’ll experience.

Our point is that improving your knowledge and skill will help you combat your stress levels while trading in several ways.

An easy way to improve your knowledge is to rely on online resources and YouTube videos, but you can also take a full-blown trading course. Personally, I highly suggest finding yourself a mentor or trading course as YouTube or articles will only give you limited knowledge.

Learn from the Best

Warren Buffett once famously said that you should “only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

In other words, don’t allow yourself to get upset because a position you’ve opened or an a market isn’t moving the way you want it to. Instead, you should try to accept it for what it is and let it go.

Another similar expression that’s often used by traders is “set it and forget it,” method which is what I personally use myself.

Use Stop-Losses

If you’re not already using stop-losses, you need to start doing so immediately. Stop-losses are not only a part of every successful trading strategy, but it’s also an incredibly effective way to limit stress.

What a stop-loss does is ensure that you never lose more than you feel comfortable with. And since the position will close automatically based on your settings, you can set the stop-loss and then focus on the next position. I can’t stress enough that when setting a stop loss always risk an amount you feel comfortable on and you won’t be tossing and turning over when you sleep.

Optimise Your Lifestyle

Lastly, a lot of traders get stressed when trading because they’re worked up about their life in general. Therefore, we advise you to get enough sleep, eat well, and try to handle any personal issues before you place yourself in front of your screens.

Men and woman out there reading this that are married, or have kids one handy tip is, if you’ve just had an argument or your kids are screaming in your ear you should avoid trading at all costs! You’ll likely to make emotion-based decisions and won’t have a clear conscious to make rational decision on.

This also includes trying to avoid high-stress people that risk bringing you down even further.

Do you have any other useful tips on how to combat trading stress? Feel free to share them with us!