Trading Psychology

Part 9: Trading Psychology – Stress in trading

trading stress psychology

trading stress psychology

Anyone who has ever dealt with the subject of the stock market or trading on the stock exchange knows that it can be a nerve-wracking activity. It’s about real money, which in principle can sometimes trigger stress. Now, if you make a mistake while trading, that one mistake can be the stress trigger that messes up your entire trading plan.

For example:

  • wrong order placement
  • you made a typo
  • You closed the trade too early
  • You have collected one or more SL
  • You placed the data of the trade on the wrong chart when you transferred it to the trading platform, and/or you placed the SL incorrectly. Comparison of existential fears and much more.

The decisive factor now is how you react to these stress triggers, do you continue to approach the whole thing stressed, according to the motto “everything has gone wrong now anyway, it can’t get any worse” and enter into trades that cannot be traded or enter a larger position size because you may or may not want to recoup your losses. An initial mistake can lead to very big mistakes, which can destroy the performance of the trading account. Was it worth it? Because of a mistake at the beginning?

You should leave it behind, purely according to the motto “what happened has happened, I can’t change it anymore”. It also makes no sense to get upset about it or let it stress you out because you have no influence on it and can no longer change the situation. You have to take responsibility for your actions! It’s always up to you!

Are you someone who, after mistakes, continues to work in a structured way or lets yourself be carried away?

  1. If you are someone who can still work in a structured way afterward, then keep it up.
  2.  If you are someone who gets confused after making a mistake, stop trading for the day and get on with other things.

It is important, however, that you do not look at the mistake immediately afterward, but leave some time in between so that you can then reflect on the mistake made in a calm and stress-free manner.

Stress in trading is a sign that something is going wrong” – Jack D. Schwager

Stress is an emotion, but can I avoid this emotion?
YES! By going through the worst-case scenarios, what is the worst that can happen? You will find it not so bad after all.

  • What is the worst thing you can lose with an SL?
  • What is the worst that can happen if I crash my account?
  • What is the worst that can happen if I miss a trade?

You know the answers. There are many more questions you can ask yourself at the end of the day. I want to show you that it’s not as bad as we think it means, conversely, we cause ourselves too much unnecessary stress.

The questions to ask are essential because they put pressure and stress in the back of our minds, so when we deal with them, these thoughts come out of the subconscious, and we become more relaxed as we than develop new and better expectations. The whole thing is therefore purely a matter of setting.

So many things in our lives have come to nothing, yet we are all still alive today!

Positive and negative stress

  • Eustress = Positive Stress
  • Distress = negative stress

Positive stress is good! It serves as a motivator, it increases our performance. With negative stress, however, the whole thing looks different, it reduces our performance and causes self-doubt. There is a sense of failure within us.
The brain stem reacts to new situations even before our consciousness.

We’ve all experienced it (especially at the beginning of our trading career) when the market moves in the direction of our SL, and we reflexively expand our SL without even thinking about it. ⇉ stressful situation

Stress + emotions = knee-jerk, unconscious actions

We feel the need to control what is happening in our lives. What we cannot control makes us feel insecure. The market can do anything at any time, we cannot control it!

TOP stress factors are: loss of control and loss of existence (which can lead to a stress spiral.)

Not only trading itself can tempt us into stressful situations, but also the environment, such as friends, family, relationships, etc.

Do you want to be right or make money?

The market does what it wants. A frequent problem of traders is above all the mentality of always wanting to be right, the market “must” the market doesn’t have to! And if you were wrong, then you get nervous and take too much risk so-called revenge trades with increased position size.

Less stress means fewer trading errors = more success

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