Emotional control is a skill that can make a big difference to your life. Keeping keep calm under pressure is undoubtedly a competence that allows us to obtain the best outcome in every circumstance, especially when it comes trading.
There are several studies that confirm that the vast majority of professionals and successful people enjoy rigid control over their emotions and are also able to stay calm in the face of adverse and unexpected situations.
One of the most interesting recent discoveries is that stress can negatively influence our capacity to control our emotions. This is because prolonged exposure to stressors can produce a form of degeneration of the area of the brain that manages self-control.
Given that stress can be an obstacle to successful trading and a negative influence on the quality of your results, hearing some valuable advice on how to keep your stress levels under control can definitely improve your overall approach to trading in financial markets.
But stress is not necessarily always a negative influence. In fact studies have revealed that although prolonged exposure to stressors is the true cause of deficiency in our capabilities, intermittent stress episodes can actually be beneficial. This is especially true for the part of our brains that deals with memory and emotional control.
This is probably because sporadic episodes of stress are, in a sense, a kind of warning signal to the brain, telling it to react in an optimal manner. Much of this depends on how we have evolved as humans over time.
While this may be true, the benefits of having a number of tricks up your sleeve for reducing your stress levels cannot be underestimated. Besides looking after your emotional health, stress reduction strategies can be useful tool when it comes to trading.
Let’s take a look at some of the strategies and approaches employed by top performers, both in the sporting arena as well by successful professionals in business and other careers. In short, we want to find out how different stress management approaches successful people use can be applied to trading.
It might seem trivial, but appreciating what you have rather than what you could have could be the first important step towards reducing the negative impact of stress. In today’s society, much of the stress we feel comes from a frustrating sense of inadequacy; the constant search for economic improvement; the desire to have what others have, and so on.
When it comes to trading, it’s important to retain a realistic outlook. Much of the advertising in this area, unfortunately, promises clients rapid gains 24/7 and a quickly elevated social status. A few simple clicks of the mouse are immediately converted into luxurious villas and luxury cars.
This kind of advertising does nothing but increase the ‘stress of performance’ and drive the aspiring trader to lose control of their business and their account. With pressure to secure immediate gains, users tend to flit through several trading systems without really getting to grips with any of them and without ever understanding what’s really important in trading.
Furthermore, it might be useful to stop thinking about what could have happened if you had made a different decision. Once a road has been taken, perhaps after careful consideration, it makes little sense to look back with rose tinted spectacles or sterile critique.
How many times do we have regrets when a trade went badly because in the run-up we were unsure whether it was the right choice? A trading system must be designed to minimize, if not entirely eliminate, this kind of situation. Losses (or costs) are an integral part of trading; they cannot be avoided, but we can control them by employing a strong risk management policy and by using a trading system that narrows the field for doubt and which limits the different kinds of interpretations that can be made.
Although it might seem strange, the way you think directly influences your personality and emotional state. When it comes to dealing with life events, having a positive attitude, for example, might actually be an effective trick for self improvement. This doesn’t mean pretending that all is well, but rather maintaining a positive approach towards the negative events that befall us.
Obviously this doesn’t just mean hoping that the trade you entered into will turn profitable. Trading is not a matter of hope, nor desire; it ‘s a matter of statistics, mental approach and rigor; a mixture of ingredients that represent the pillars of any successful business transaction.
After all these tips, the one that follows is perhaps one of the most important. Being ‘available’ 24 hours a day, 7 days a week, is a huge source of stress. And yet, being available for anything, at any time and at short notice, is something which modern society seems determined to demand of us. Take smartphones: they follow us everywhere and allow friends, colleagues and bosses to call or text us at any time of the day or night.
All this is especially true when it comes to trading. Being profitable doesn’t necessarily mean standing in front of graphics for hours. Indeed, this approach is usually counterproductive and risks fueling stress and negative experiences.
However, taking a few quiet moments for yourself away from the trading screen is a deadly weapon in fighting stress and an important step towards self improvement. At the end of the day, life doesn’t just involve constantly doing things. It would be far too simplistic.
Some other practical advice? One tip is to reduce intake of stimulants such as caffeine, which stimulates the production of adrenaline, a hormone that is released in large quantities, particularly when you are in danger. While certainly useful when being chased by a bear, in normal situations adrenaline only serves to further disrupt our state of calm.
What might happen if your trading decisions were dictated by a moment of impulse? Many traders have been ruined this way. Trading should be uneventful and should only involve minimal emotional output.
And what about sleep? Though overlooked by many people, it is one of those precious moments when body and mind are revitalized. Sleeping too little (or too much) is really a bad habit. There is no precise number of hours that you should sleep (we are all different), but at the very least you should aim to get enough sleep to wake up refreshed and ready for the new day.
So, avoid going to bed too late, especially if you have to wake up early in the morning. Sleep is free, but its benefits in terms of emotional health are truly exceptional.
What’s more, the potential damage and errors you could commit during a trading session as a result of not being fully awake due to lack of sleep are clearly evident.
At this point there is already considerable food for thought, but successful people also give us some other advice for developing emotional control.
For example, it is important to drastically reduce thoughts about the past and about previous negative issues you might have had. You no longer have the ability to impact them and there’s nothing you can do to change them. Continuing to think about situations that haven’t brought us happiness does nothing but strengthen these negative feelings and worsen our emotional state.
For example, thinking about the accounts you might have lost in the past is generally futile. This type of thinking only becomes useful when you do it in an intelligent way: investigating the reasons why things happened the way they did, in order to improve your trading style.
Then there are a whole series of events that periodically occur and over which we do not actually have any control. Throughout all these events having the right approach becomes a priority, without going to extremes. How many times during a day, for example, do we repeat to ourselves: “Everything is going wrong today” or “today nothing will be OK”? This is where an immediate change of perspective is needed.
The above sentences and are strongly limiting and not supported by any rationale or logic. Traffic, a faulty component in your car, a blackout while working at your computer: these are all examples of stressful situations, none of which are under our direct control.
A typical example in trading is this: you enter a trade and the price immediately moves in the opposite direction. It seems as if the market is spying on you in order to make your trade go sour. But the market doesn’t care about you or I; it does exactly what it wants for itself. So our trading system must be rational and well defined.
Then, perhaps unexpectedly, successful people also pay great attention to their breath. Yes, breath is another vital element, which is often overlooked. In a moment of stress, there’s no better way to regain your calm than to take a few minutes for yourself, be silent and listen to the sound of your breathing.
Breathing properly is the lifeblood for your mind and for your own emotional health. A simple trick might be to count from 20 to 1, completing a complete breath (inhaling and exhaling) on each count. It may seem a trivial and unnecessary exercise but it may surprise you to see how effective it can be during a trading session.
The last piece advice to be taken from successful people surrounds being able to manage those situations of stress or pressure, which we find ourselves unable to cope with. In these cases you can turn to a trusted person who can help you. To recognize your weakness and to understand when you can’t go it alone is a sign of great maturity and control.
Everyone has someone at work, in their family, or their circle of friends and acquaintances, whom he or she can trust and to vent to when things don’t seem to be going the way you want. You should never be ashamed or afraid to show your emotional state; a chat with the right person might put you back on track immediately.
In short, these are some of the techniques that successful people use. Improving the relationship with yourself, your emotional health, your self-control: these are key factors in life in general. And, considering that psychology is a key element of trading, in this field too they are undoubtedly factors that can make the difference between a losing, frustrated trader and a profitable, joyful one.