How to deal with forex trading stress
Given the fast-paced nature of the forex market and its potential to result in monetary losses, it is not surprising that a lot of traders suffer from stress. After all, the idea of losing real money in a forex trade can lead to frustration and in some cases, anger aimed at oneself or the markets.
During these times of stress, traders can be prone to not thinking clearly or making plenty of trading mistakes. Proper habits in trading execution might be thrown out the window when one is desperate to make money back after a series of losing trades. A trader might wind up overtrading in an effort to bounce back from a loss, failing to focus on adjustments that might need to be made.
When you feel that you are stressed because of trading, you could try to take a step back to identify what’s causing your stress. Is it because you have been losing trades one after another? Are you missing out on key market events? Either way, you can have a quick review of your trading journal in order to determine if you need to make any changes.
Stress not only on the market
Stress might also be induced by external factors and in this case, taking time off is also recommended. If you are under a lot of pressure in your job or having problems in your family, then you might be better off focusing your energy on addressing these concerns first instead of letting your stress interfere with your trading.
How to deal with stress
The first way to deal with stress is to acknowledge it. Identify where the stress is coming from so that you would be able to figure out how to eliminate it. If you refuse to admit that your stress levels are rising, your trading account might take the brunt of it and you would wind up in a worse position than before. It is important to address the problem early on before it compounds and leaves you in a much more stressful situation that is more difficult to get out of.
The next step is to calm down. While trading under stress can lead to panic or indecision during volatile market situations, you should remind yourself to take it easy and keep a clearer head. It is easier said than done but you can try isolating the negative emotions influencing your trading and start focusing on pertinent market factors and price action.
Lastly, keep track of your source of stress so that you can be able to deal with the situation when it comes up again. Do you get easily stressed when an economic event is coming up? Then you can come up with ways to limit your exposure or remind yourself to stay on the sidelines next time. Do you feel the stress when you are trading larger positions? Remind yourself to stick to a standard risk amount or make more gradual increases next time.
Even if stress will come and go throughout the course of your trading career, it is important that you know how to handle it and prevent it from interfering with your trade decisions. In fact, you can even turn it around and make yourself more alert to the trading aspects that you should be more focused on.