Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

Rande Howell

Managing the Stress of Trading

Recommended Posts

Work harder. Be dogged after a failure – be persistent and push harder next time until success comes. Never give up. Never show a weakness. Everyone has heard these tried and true axioms of success. And these axioms have proved to be true in other endeavors outside of trading to the point that they have simply become the bedrock of "success" thinking. They seem so self-evident that few question whether they are also effective in the performance of trading.


Why? It is natural to assume that attacking a problem by brute force and finally forcing your will upon outcome will work in trading as it has in other endeavors. This approach has great appeal for males with their testosterone-driven perception. Yet after the smoke clears for the umpteenth time, this kind of thinking produces persistent draw-downs in a trader’s account. What’s the disconnect?


Stress – Facing the Challenges of Life.


First, let’s define stress. For our purposes here, stress can be defined as your response to the challenges of life. Anytime you experience uncertainty, the body/mind is triggered to a stress response and the body and mind are placed on alert for the duration of the stress or challenge. In the not-so-distant past, stressors or challenges were fairly short in duration (but intense) and the body adapted to this. Finally, these short-term adaptations to challenges were so successful that they were burned into our DNA. So they became automatic, reactive biases built into our very nature.


While the high alert status of the stress response allowed your ancestors to deal with a particular challenge (being threatened or approaching predators), eventually the body calmed down because the uncertainty - the threat of real predators - was gone. Life was good again. The body and mind then naturally fell back into homeostasis (calm state of mind) until the next challenge appeared in the environment.


The take-away for the trader here is that the act of trading produces the very circumstance that triggers the stress response. And the brain/mind built for survival in a world of danger cannot distinguish the difference between the challenge to an uncertain future while being confronted by a saber-tooth tiger and the challenge of an uncertain future that confronts a trader every day.


And until the trader can separate the two (biological threat and psychological discomfort), the body is always going to overwhelm the mind when it senses danger. Trading requires the smart management of stress (emotional intelligence) because it is unavoidable. What matters is the skills that the trader brings to the management of uncertainty and the challenges that are inherent in trading.


Stress is Your Friend or Enemy – Depending on How You Use It.


The relationship between stress and performance has been studied since the early 1900’s. Reduced to a graph, it looks like a bell-shaped curve. And essentially what was discovered is that stress is good up to a point. It keeps you focused, alert, on-task, and concerned about your current situation. It also produces a highly flexible state where the organism (the trader while trading) can respond thoughtfully to changes in the environment. This “good” stress is called eustress and it is the cornerstone of a peak performance mind.


Then, after this period of eustress responding to the stressors of life, performance drops off dramatically. However, when stress is prolonged without effective coping skills for its management, the good stress of eustress becomes the bad stress of distress. Concentration levels go down and mistakes go up. The mind becomes confused and reactive. The distress will build (unless effective intervention is made) until burnout occurs and you are no longer capable of performing to the best of your abilities.


As you have probably noticed, this scenario is common among traders. Particularly when they are trying to push themselves through the management of uncertainty with brute strength. So up until a point, working harder, being persistent in the face of failure, and never giving up did help. But without the addition of new, more effective, coping skills, this approach leads to distress. And distress leads to compromised thinking that shows up in your trading account as drawdowns.


Fundamentally what is required is a new approach to understanding stress and its management.


Failure as a Path to Improvement


I'm not saying that you should stop being persistent. Instead I’m asking you to come to a new understanding of what persistency is. Persistency is not doing something over and over again until you force your will upon the markets. I know many traders who have tried this approach and have truly traumatized themselves as they keep running into the same brick wall over and over again expecting a different outcome. It doesn’t happen that way.


Once you learn how to regulate emotional intensity by breath and relaxation training, you will get to the door of the mind. And it is the mind where you find the beliefs that you are projecting upon the markets. It is these projected beliefs that you produce the results that you see in your trading account. So failure can help you to isolate the belief about your capacity to manage uncertainty that has been holding back your success in trading – if you have the openness to learn from your mistakes.


The trait of persistency helps you to find the self-limiting beliefs behind your lack of performance. These are not the beliefs that you talk about. These are the operational beliefs behind your performance in the face of uncertainty. These are two very different things. You can fool yourself and other people, but you cannot fool your trading account for long. After luck runs its course, you discover that the markets don’t care. If you insist on bringing ineffective beliefs to the management of uncertainty, the markets will allow you to burn capital.


The more you project ineffective beliefs upon the markets about the management of uncertainty, the more you experience the stress of trading as distress, rather than eustress. It’s not about working harder, working more, trading more, or pushing yourself – it is about the beliefs you bring to the management of uncertainty.


Once you realize and truly accept that you have to give up control of the outcome in trading (certainty), trading becomes the microscope to aid you in discovering the operational beliefs behind your performance in the challenges of trading. Mistakes show you the way. You are no longer using persistency as a bull-headed denial of reality. Instead you are using feedback from your failures to point out the beliefs behind performance.


Personal performance is the one thing that you can control in the management of uncertainty found in trading. It is here that you find the real beliefs about your capacity to manage uncertainty. This is what you have been avoiding having to face. Yet no matter where you go, there they are. They are waiting for you to discover them and change them so that you can re-organize the mind that you can bring to the challenges of trading. It is here that the worry-based mind of distress in trading is transformed into the concern-based mind of eustress.


It is your choice. The markets are not capable of caring. If you insist on bringing ineffective beliefs to the performance of trading and refuse to learn, then so be it. And the new reality is that the mind that you bring to the management of uncertainty is the only thing that you can control. When you begin seeing trading as your teacher, then you have opened the door to learning how to manage stress in trading.


Rande Howell

Share this post

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Topics

  • Posts

    • CARDANO PRICE EXPOSES TO $0.98 SUPPORT LEVEL ADA Price Analysis – January 25 When the sellers increase their momentum to push down price below $0.98, the support level of $0.83 and $0.73 may be tested. In case the Support level of $0.98 holds, the buyers may push up the price towards $1.11, $1.30 and $1.46 levels. ADA/USD Market Key Levels: Resistance levels: $1.11, $1.30, $1.46 Support levels: $0.98, $0.83, $0.73 ADA/USD Long-term Trend: Bearish Cardano is bearish on daily chart. Buyers and sellers are struggling over the crypto. The sellers are trying to overpower the buyers. Former support level of $1.30 and $1.11 has been penetrated downside by the sellers and the price exposes to $0.98 support level. There is tendency for the price to decline further if the sellers maintain their pressure. ADAUSD Daily chart, January 25 Cardano has crossed the two EMAs downside, currently trading below the 9 periods EMA and 21 periods EMA at distance which indicate a bearish movement. When the sellers increase their momentum to push down price below $0.98, the support level of $0.83 and $0.73 may be tested. In case the Support level of $0.98 holds, the buyers may push up the price towards $1.11, $1.30 and $1.46 levels. The relative Strength Index period 14 is at 40 levels with the signal line pointing downside which indicates sell signal. ADA/USD Medium-term Trend: Bearish Cardano is on the bearish movement on 4-hour chart. The bullish movement could not continue when the buyers pushed up Cardano to test the resistance level at $1.64. The bears reacted against the price increase with the formation of bearish engulfing candle. The price started decreasing and the support level of $1.30 is broken downside. Further price decrease envisaged as the price is below the two dynamic resistance levels. ADAUSD 4-hour chart, January 25 The price is trading below the 9 periods EMA and 21 periods EMA. The relative strength index period 14 is at 40 levels and the signal line pointing down to indicate sell signal. Source: https://learn2.trade 
    • SOLANA REACHES OVERSOLD REGION AS THE ALTCOIN MAKES DEEPER CORRECTION Solana has fallen to the low of $87 SOL/USD has reached the oversold region Solana (SOL) Current Statistics The current price: $90.94 Market Capitalization: $46,528,296,188 Trading Volume: $4,555,783,625 Major supply zones: $280, $300, $320 Major demand zones: $160, $140, $120 Solana (SOL) Price Analysis January 24, 2022 Solana’s (SOL) price has fallen significantly to the low of $87 as the altcoin makes deeper correction. The crypto’s price corrected upward but faces resistance at $104. If the crypto is facing resistance at $104, it implies that the selling pressure will resume to the downside. Presently, the altcoin is fluctuating between $80 and $104 price levels. The crypto will resume trending when the range-bound levels are breached. For instance, if the bears break below the $80, the market will decline to $68 low. SOL/USD – Daily Chart Solana (SOL) Technical Indicators Reading Solana is at level 23 of the Relative Strength Index for period 14. The cryptocurrency is seriously in the oversold region. This is an indication that the current downtrend has reached bearish exhaustion. SOL/USD is below the 20% range of the daily stochastic. It indicates that the market has reached the oversold region of the market. Since December 29, the altcoin has been trading in the oversold region of the market. The 21-day SMA and 50-day SMA are sloping downward indicating the downtrend. Conclusion Solana is in a downward move as the altcoin makes deeper correction.. The current price action and Fibonacci tool analysis are closely related. The cryptocurrency has reached the oversold region and there is a possibility of price reversal. Meanwhile, on December 14 downtrend; a retraced candle body tested the 61.8% Fibonacci retracement level. The retracement indicates that Solana will fall to level 1.618 Fibonacci extensions or $79.34. SOL/USD – Daily Chart     Source: https://learn2.trade 
    • Date : 25th January 2022. Market update – January 25. A flight out of equities and into the safety of bonds was the opening theme yesterday – Could we see this repeated? US futures are under pressure once again, alongside a broad sell off across Asian equity markets. Tensions over the Ukraine, virus developments in China and the prospect of reduced central bank support all continued to weigh on sentiment overnight. The rise in Omicron cases ahead of the Lunar New Year holidays and of course the Olympic Games is adding to nervousness over slowing growth.   Australia’s inflation rate came in higher than expected, which added to growing conviction that the RBA will end its quantitative easing program at the February 1 meeting. Singapore surprised with a move to tighten policy outside of a scheduled review USD (USDIndex 95.90) saw a pullback after breaching 96.11. Treasury rates dove lower with a strongly bid 2-year sale extending the slide. The just auctioned 2-year rate dropped 7 bps to hit 0.970%. Equities – Hang Seng and CEI 200 expected to drop more than -1.8% today. The Nikkei closed with a loss of -1.7%, the ASX plunged -2.5% after the hot inflation report. Yesterday, USA100 crashed -4.9%, with the broader indexes over -3% lower before hitting bottom and paring losses. But a late buy the dip rally saw the USA100 rally 0.63%, with the USA500 and USA30 up 0.29%. USOil – back to $82.00 territory, – recovering some of yesterday’s losses, as growing tension in Eastern Europe and the Middle East fuelled concerns over possible supply disruptions. Lower US oil inventories are also providing support. Gold – held on to gains at $1841 as investors sought safety. Bitcoin steadied to $35,000 handle. FX markets – The Yen was supported as risk aversion picked up and USDJPY dropped to 113.66. EURUSD at 1.1306 & Cable below 1.3500. European Open – European stock futures are signalling a bounce back from yesterday’s sell off, with the GER40 and UK100 currently posting gains of 1.1% and 0.8% respectively. EGB yields are set to rise today, as stock markets bounce back from yesterday’s sell off. The German 10-year Bund yield is up 1.4 bp at -0.097% in early trade, the French 10-year up 1.3 bp, both underperforming versus Treasuries, which have moved higher overnight, as Asian stock markets sold off. Today – The FOMC meeting starts today, with an announcement due tomorrow, ahead of the ECB and BoE meetings in February. Geopolitical risks will remain in focus today, while the data calendar highlights are the German Ifo readings and the UK CBI manufacturing survey. Biggest FX Mover @ (07:30 GMT) Cocoa (-3.22%) Huge dive to 2488 from 2684 highs seen last week, breaking all daily SMAs (20-, 50-, 200-day). Fast MAs aligned lower intraday with all momentum indicators pointing further lower. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HotForex Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Andria Pichidi Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • How much is the minimum deposit to trade with this broker?
    • I first time hear about Ocata 😂 All others are well-known.
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.