Trading Psychology To Staying Calm
The Calm Within The Trading Storm
Trading can be such a stressful activity, and as a trader you may constantly feel the pressure to perform. If you don’t perform, you don’t put profits in your trading account. And if you don’t put profits into your trading account, well…. that leads to a whole lot of other things.
If you take short term trades during an especially hectic, chaotic and messy day, it can sometimes seem quite overwhelming. Your emotions can surge positive one instant and go south the next. When everything seems to be happening at once, it can be quite difficult to have a handle on your trading emotions.
Even if you do have your trading plan all written down in simple clear steps, your emotions may overwhelm your ability to actually execute it. Have you ever experienced moments like these? *wry smile*
Link Between Mind and Body
It’s important for traders, especially short term traders, to have a state of mental calm and peace. The link between mind and body has long been known to medical science, and what goes on in the mind can easily affect the body while what goes on in the body can easily affect the mind.
When emotions run wild, it can severely impact your trading results. For example, if your emotions are surging wildly you may be tempted to take profits prematurely. Even if your trading plan tells you to wait, seeing that little bit of money in your account can be so overwhelmingly tempting. The need for instant gratification for “little successes” can cause you to push that button to close out that trade.
Wild emotions can cause you to take that “sure bet” rather than letting profits run.
At the same time, if trades move into negative territory temporarily, you can go into overwhelming panic that everything’s going wrong. It doesn’t really make that much difference even if you know that you’ve maintained your portfolio risk on this particular trade.
Emotions don’t necessarily make logical sense.
Calming Yourself
So how do you calm yourself down when you find yourself being emotionally overwhelmed?
When you have your trading plan in front of you, your stop losses and profits target already entered into your trading platform, it can help some. However, if you continue to watch whatever it is that’s causing you to panic in the first place, it’s highly unlikely you’ll reach a state of calm.
It’s like watching a horror movie that really scares you. The more you watch it, the more terrified you feel. Even if you tell yourself it’s only a movie, by continuing to watch it you only continue to perpetuate your emotionally terrified state.
Some of the things that you can do are:
Create a peaceful and harmonious trading environment by playing soothing music in the background, or simplifying your trading desk to whatever is necessary and remove all other unnecessary elements during your trading hours.
Another way is to do something that distracts your mind from the market movements. You could try repeating certain sentences to bring on a state of calm through meditation. Sentences like “Allow the trading system to work“, “Everything’s going to work out fine” or some other sentence that usually puts you into a calmer state.
The main idea is to get your mind away from what’s causing you emotional distress and calming your body down. Get that racing heart to slow down, and your mind to stop chasing imaginary shadows. You can even perform alternate activities, like stretching, juggling, playing the guitar. Anything that helps you to distract yourself and calm yourself down.
Do things that allow you to reach that inner place inside where you are “in the zone”. When you are “in the zone“, it’s easier for you to “get with the flow“.
Trading requires a calm, optimum mental state. Many times, markets are going to do what they are going to do anyway, and the best thing you can possibly do is to stick to your trading plan. When you allow stress to get to you, it can wear you down not only mentally but physically as well. When you feel stressed, get away from your trading desk. Calm yourself down.
Return to a meditative state where you can become focused, clear and calm, where you can look at the markets with a cool objective eye.
Every little thing that you do can help you become a better trader, even something as simple as playing soothing music in the background while you trade.