Beating Stress for Improved Trading Results
Read Time: 3 Minutes
After taking two straight weeks off trading, I've come to one simple conclusion: Trading is stressful as f*ck.
It's actually kind of scary how much my stress levels have dropped off over these last two weeks, and it makes me wonder about the damaging effects that stress has likely had on my trading performance.
Why Is Trading So Stressful?
I've been thinking about this question quite a bit and I've come up with two things that I believe have been the leading contributors to my high stress levels since I started trading:
- Focusing on the wrong types of goals: As a new trader, my goals should have been centered around skill development, capital preservation, rule-following, and finding my edge. Instead, I set unrealistic P&L goals that resulted in high levels of stress and the formation of bad habits such as over-trading, revenge trading, and moving stop losses.
- Oversizing: When I first started trading my max risk per trade was $36 but over time, I began to increase that number. Looking back, that was a huge mistake because it introduced fear-based emotions before I was ready for them. I think the goal of a new trader should be to trade small sizes for as long as it takes to find their edge.
How I Plan On Managing My Stress Moving Forward
Feeling constantly stressed out is not fun. It's bad for our health, it's bad for our personal relationships, and as traders, it's bad for our performance.
Before I took this little trading break, I didn't realize how stressed I had become, but now that I know, I can start to develop a plan to manage it. Here are the four changes that I plan on making when I return to trading:
- I will do a self-assessment of my stress levels each day and take breaks from trading as needed. If I feel highly stressed in the morning, I'll size down or not trade at all that day. If I feel stressed during the trading day, I'll stop trading for the day. If I end the trading day feeling overly stressed or frustrated, I'll take the following day off to cool down.
- I will re-work all of my trading goals with a focus on long-term, sustainable trading success over short-term profits. My new goals will be related to following my trading rules, eliminating bad habits, using proper risk, and identifying 3-5 consistently profitable trade setups.
- I will size down. I will aim for $25-$50 of risk per trade and the only way I can increase that number is if it's for a trade setup that has a greater than 50% win rate. Note: As of now, I only have one trade setup that matches that criteria (bull flag above a key level).
- I will set a limit of 3 hours of active trading per day. Anything over that tends to result in stress and a breakdown of self-control.
With any luck, these four changes will help me control my stress levels and trade more effectively moving forward.
If you're a trader, I'd love to hear how you combat trading stress. Are there any tactics or ways of thinking that have helped you? Message me on Twitter or via email (hello@ericevenstad.com) and let me know.
Join the Day Trading Inner Circle
Follow along as I strive to become a profitable day trader. Every Sunday, I send out an email with my weekly trading stats plus the most important learning resources that I discovered that week. Drop your email in the box below to join the inner circle.
Home Newsletter Signup
Previous Issues of Side Hustle Steroids
