How to Manage Trading Stress: Tips for Traders

Trading stress is one of the internal factors that hinder a trader's path to success. It has a rather high incidence in cases of failure. Nevertheless, it is an irreplaceable presence. Stress is common to all traders: experts and beginners, winners and losers. What changes is the relationship each person has with "their stress". Those who contain it, manage it, and even manage to channel it into a perspective of usefulness, are able to do well and continue to earn. All others are limited by it. In this article, we talk about stress, particularly trading stress, offering some advice on how to best manage it.

What is stress

From a chemical and physical point of view, trading stress is simply... Stress. It does not present particular differences with the stress experienced in daily life or professional life. Everyone more or less knows what stress is because everyone experiences it. After all, it is a natural reaction of the body. However, understanding what it is organically is fundamental to being able to defeat it. From a scientific point of view, stress is the psychological pressure that an individual feels when put to the test, when called upon to carry out a challenging activity that, if not completed, can cause damage. However, stress is above all the reaction the body produces to such pressure, a reaction aimed precisely at improving performance. It is no coincidence that when the body is under stress, it tends to produce more cortisol. Put this way, it seems that stress is something positive. And indeed it is. Of course, it is not pleasant, but at least it is functional. It is a tool for succeeding in one's tasks. The problem arises when stress degenerates and becomes "bad" stress. Very simply, when the reaction is excessive. In this case, the opposite effect is recorded: stress, instead of helping, compromises. In particular, it compromises lucidity and the ability to concentrate. Above all, it modifies the emotional response. Here, like a specter that gradually materializes, fear appears. A fear that is paralyzing, that can tend towards panic. Therefore, when stress is present in the right measure, it is good. When it is "too much", it is bad, very bad. This happens in everyday life and it happens in trading. From adrenaline, one risks moving to the inability to react. As we have already said, everyone experiences stress. However, some are predisposed to developing the bad, excessive kind. It depends a bit on genetics but also on one's personal history, character, and the mental and moral cognitive strengths one possesses.

How trading stress works

Stress in trading works exactly like stress in all other activities. However, it manifests itself with quite different effects and consequences, which are obviously related to the specific dynamics of the investment activity. It is therefore useful to recapitulate the actions that a stressed trader generally performs. If you find yourself in them, turn on your personal alarm bell. Slows down or postpones decisions. Those who are stressed tend to be afraid. Not always, but very often this is the case. If this symptom emerges, the trader would have a lot of difficulty making a decision, precisely because of the fear of making a mistake. Too bad that in trading, especially when unforeseen events occur, speed of thought and decision-making is fundamental. Lacks discipline. Those who are stressed are very likely to struggle to keep the bar straight, that is, to maintain sufficient lucidity to read situations and understand what to do. Often, therefore, they are unable to faithfully follow their trading plan. And, as we know, when we go off the beaten path, trouble is just around the corner... Stops trading. Actually, this happens when the stress has reached its peak and has even moved on to the next stage: anxiety. This is a disorder that partly derives from stress but is actually something else, and moreover much more serious. In any case, the very stressed trader may stop trading to avoid the agent that causes the stress, i.e. trading itself. Only to then regret it, and become even more stressed, for having lost opportunities.

A solution to stress

The problem of stress is not exactly easy to solve. However, there is certainly some possibility, if some concrete measures are taken, at least to placate its effects. These are actions that anyone is able to put in place. It just takes a little patience. Stop trading. Not forever, obviously. Simply, unplug for a while. At the very least, a break is useful for putting things in order within oneself, for recharging emotional energies. Reduce the frequency. Very simply, trade... A little less quickly. Space out the frequency of trading, if you feel stressed, and the emotional fatigue will probably pass. Of course, this advice is more difficult to follow for those who do intraday or even scalping trading. Resize the importance of traders. This is the most difficult advice to adopt. Also because it involves, more than mere operation, the entire approach adopted towards trading. It is a matter of internalizing some concepts, which have the function of lightening the mind. The first concept to internalize is that defeat is part of trading, so there is no need to make a drama out of it. The second, always along these lines, is that no defeat is irreparable, especially if good management is adopted. The third is that one's self-esteem does not depend on trading. Many, and stress also derives from this, identify with their investment activity. It is a wrong mental process, which it is good to renounce as soon as possible.