Trading Stress Your Questions Answered (Part 1)

As traders in a 24-hour market, we are certainly forced to contend with a great deal of stress. Many times, this stress is intensified through periods of losing streaks and rough patches. But in the end, it’s the coping mechanisms used to handle this stress that ultimately determine our ability to find a healthy and profitable path. In this blog I’m going to be answering a few of the most popular questions that I have received over the Christmas period. And of course, as we start the new year, now is the perfect time to up our stress protection. By following these simple guidelines.


How Best to Deal with Emotional Swings?

Let’s get one thing straight from the off, emotional swings are exactly like trading swings. You go from low to high and back again. Sometimes it is a slow journey and the volatility seems low and sometimes it makes you feel sick in the pit of your stomach. As the highs and the lows come in faster and faster. It’s how you handle or control these emotional swings that determines your success as a trader.

It’s the emotional swing that makes you play with your stop. When you take profit at the first sign of trouble, it’s an emotional swing. There is a saying in trading that goes like this:

“Cut your losses short and let your profits run.” Perfect. Sounds so easy, and yet 95% of retail traders fail to do just that. Fear, Greed and that emotional swing just kick you in the nuts and make you do stupid shit. And when we are already stressed we just go to the stupid stuff much faster.

Now we can’t just cut all stress out of our lives. For every negative to hold true there must be a positive, you can’t have ying without yang. Which means that not all stress is bad. The good stress we refer to as “eustress”, it’s the stress you feel when you feel excited. As with any stress, or anything for that matter, moderation is key. Too much stress of any kind is bad for the body and bad for the mind. And let’s not forget the way it quickly leads to not following your rules and making really bad decisions in the market.

What we need to do as traders is take care of ourselves. By doing this we actually give ourselves a layer of stress protection. Put basically, this means we can handle more stress before the stupid stuff starts to happen. We are though also human, which tends to mean that we care more about animals from a far away place than we do ourselves.

Stress protection will take effort on your part, but the benefits are immense. Imagine no stupid decisions in the market. And the constant ease in which to follow your rules. Imagine no emotion stopping you from cutting your losses short and letting your profits run. You could convert a losing strategy into a winning one, or you may double your returns. Sounds like something we should all be doing. I mean as a retail trader, surely the most important part of our strategy is … well it’s us, isn’t it? So, shouldn’t we look after us?

Stress protection comes in several varieties. You need to get the right amount of sleep, it will help if you eat healthily, and you might want to exercise regularly. Reduce or stop your alcohol and coffee consumption. While they might feel like they reduce stress in the moment. They actually lead to more fatigue, worse sleep, and even more tenuous mood swings. Same goes for cigarettes, I remember saying to myself and others “I feel a bit stressed, I’m going for a smoke.” What a load of rubbish, the good feeling I received in the first puff or two were merely my addiction being satisfied. Cigarettes are a drug that is addictive and poisonous. I was killing myself and I knew it. Even my subconscious thought I was an idiot.

My stress protection level greatly increased after I quit smoking. I noticed that I could handle being in the market a lot easier once I quit. And it would take much longer before I even thought about doing stupid stuff. If you are a smoker I strongly suggest you quit. Not only for your health, but for your trading.

Dealing with a home office

Unless you have tried this yourself, you really won’t appreciate how hard this really is. I certainly didn’t. At one stage my office was in the bedroom and I swear there were days when I never left that room. That is not good and that is not healthy … on so many levels.

I still have struggles with my wife and children, understanding the “I’m working rule”. They see me as in the house, just behind the door. So, if they want to ask me a question or show me a picture. They just walk in. They don’t understand.

While it may seem to be a good idea to be able to keep checking on your trades throughout the day via your phone or PC. In reality it can lead to poor decisions and more emotional stress, as even your mind needs a rest from time to time.

Balance in your life is paramount, for both your psychological health and your need for clarity. This means spreading yourself evenly between family, friends, fun, education, spiritual and job/career/business. Which can be difficult when working from home. I would advise you to keep some semblance of structure and have boundaries. Consider planning your working hours and creating routines for the week ahead and schedule them in your diary or calendar. Also schedule in leisure time, since often it gets put off. Remember, taking time to relax makes you sharper when you do get back to work.

I would also suggest wearing clothes that you designate as work clothes, to help remind you that you are stepping into your place of business. This may sound ridiculous, but it actually works. Ideally you want to have an office that is locked when you are not working. This will help keep you out of it when it’s not a scheduled work session.

In our house we have a rule of no phones on or near the dinner table, this keeps the conversation flowing which actually helps with the relaxation process. I also turn my phone off when it’s family time. I am lucky enough to have two small children in my life right now. And I can honestly tell you that smiling, and laughing is very much the best medicine for anything. It’s a bit like a reboot, it wipes away anything else on the mind. Again this is what relaxation is all about.

home office


How to spot stress early

Stress can affect you both physically, emotionally, and mentally. Physically, you might have troubles sleeping, a change in your eating patterns, muscle tension and repetitive colds and flus, head and backaches, digestive problems, and more. Emotionally, look for marked differences in how you would normally feel and act. You might suddenly be more volatile and restless. Or you might go the other way and feel lethargic, low, or withdrawn. And mentally, look out for forgetfulness and an inability to concentrate. Stress can also be behind things like growing substance abuse or a lack of libido.


It’s a 24hr Market, When Can I Sleep?

The mind normally keeps you awake when it doesn’t trust you to remember. Always have a to do list, always keep the most important to dos at the top and then make sure you do them. This will then encourage your mind to trust you, thus letting you sleep.

If it’s a trade keeping you awake, close it. The whole point of a trading plan complete with equity management is to allow you to sleep easily with confidence. If it’s not working I would suggest going back and make sure everything is present and correct. Have you written your Business Plan? Have you back tested and forward tested your strategy? Does your trading plan keep all your decisions out of the market and stop you over trading? Once you have confidence in your strategy, sleep will follow.

If it’s a mistake or decision you made that is keeping you awake. Just write it down and tell your mind you will take care of it in the morning, make it a part of your to do list. And make sure you do it, you are trying to build trust between you and your mind.

If you are standing or sitting with your mouth open wondering “Is this guy for real?” I’m telling what I do, what worked or works for me. This is not stuff I have read and I’m passing on with no real knowledge to it’s worth. I don’t have sleep trouble any more, I have a white board in my office. And my mind trusts me to take care of all the important things. I’m normally asleep two minutes after my head hits the pillow, annoys my wife all the time.

Another fairly common problem is when you worry about a future you have no control over. And your mind starts playing what if scenario’s in your head. My way around this was to thank my mind for it’s caring nature. But remind it that whatever it predicts is never actually that bad. When your mind is keeping you awake with “what if’s” like what if  you mess up or stutter. Fall over, turn up late. Mess your pants, fluff your lines, miss your entry or miss your exit. It doesn’t mean the end of the world. You will be surprised at how relaxing it can be to know that you will actually be able to deal with whatever happens and that life will go on.

Can't sleep due to stress


Monitor Your Stress

We at Special FX Academy have devised a most brilliant little test, or to be more accurate, thorough test. That will allow you to monitor the stress levels in your life and the protection you have in place against stress. It will show you many ways in which to reduce the stress I your life. As well as showing you plenty of ways to protect yourself against stress and stressors. I would suggest that you make this at least a yearly review, I personally do it quarterly. It can work as an early warning signal, so take the test here.

If you are struggling to learn to trade consistently by yourself, then I would suggest taking a look at our Trading Room. Here you will gain access to two coaches, Andres – Director of Trading and myself Director of Trading Psychology. Where else can you learn and be coached by a Trading coach and a Trading Psychology Coach, while making pips?


To Your Consistently Profitable Trading



P.S. What did you think of this Lesson? Please share it with us in the comments below!

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Callum McLean

Co-Founder and Trading Psychologist at Special FX Academy
Trading Psychology Coach and Certified NLP Coach. It is my belief that trading is 99% Psychological. And it is by understanding and improving your psychology, that you can be a successful trader. Success is a formula that everyone can and should learn.
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