Just Sit & Enjoy ,Technically Yours/ASR TEAM/BARODA/INDIA
Archives of “stress” tag
rssTrade Your Plan
“When you see a position that is going against you and the market is dropping, and you are losing money on a trade, but your stop loss hasn’t been hit yet, how do you stay with the position? What is your secret? Do you pullback and look at the big picture or do you simple assume its all noise as long as it doesn’t hit that lower low? This is my biggest problem with tracking your trades and most of the time you are right in holding on.” … Because we thought our answer to his question may be beneficial to other traders as well, we wanted to share our reply to his e-mail, which was… “The key point you stated is ‘but your stop loss hasn’t been hit yet.’ When we put on a trade, it’s like entering into a contract, so we try to stay the course and simply follow the plan. Over the years, we’ve found it’s best to stick with our original analysis because we usually plan a trade at night, or in the pre-market, without the stress of live trading. During the trading session, in the heat of the moment, there is so much pressure that we have to fight the voice in our heads telling us to sell the position when everything around is crumbling. It basically comes down to planning the trade and trading the plan…easier said than done, right? Sometimes, if you have a feeling things are going bad, and you’re an active trader, you can maybe sell 1/4 or 1/3 of the position to ease your mind. However, you must have the discipline to get back in once the coast is clear. Try to lay out a plan, write it on paper, and stick to it. The one thing every trader must accept, in order to be successful, is a loss. You must be fully prepared to lose what you’re risking. Once you accept losses as part of the trading game, the pressure to be right is not so intense. By the way, we at ASR are no different; we fight the same urges to sell that most traders do. It’s a constant battle, that’s for sure!” |
Have the proper mindset
Trading is not for everyone. There certainly is a high burnout factor among professional traders due to the stress involved. Think of the markets as various shark tanks, with a certain number of sharks fighting for those scraps of meat.
Some of the work personality traits that will help you succeed over the long run include:
Having a thick skin, being able to remove emotions, ability to think clearly in the moment when all hell is breaking loose, attention to detail, pattern recognition, analytical mind, aversion to gambling for gambling’s sake, creative and innovative thinking.
These can be developed through experience, although some certainly have these more “ingrained” in themselves from the beginning. Having a full life outside of your trading is also important – the ability to “switch off” and not take your trading results home with you each day will lead to a longer and happier trading career.
The Same Winning Principles
In life, as in trading, the right mindset is crucial for success. You must be confident in your decisions because they are based on cause and effect, not on emotions or opinion. Negative people who are unsure of themselves are not successful in any field. You need faith in yourself and your methods to be able to persevere and not give up before reaching success.
• You can risk too much and lose it all in your business, life, marriage, friendships or family. You have to measure the potential cost of every action. One affair can cost you your marriage, just like one big trade with too much risk can cost you all your capital.
• In business there are certain methods which bring in customers and turn a profit, and others which cause a business to turn away customers and lose money. Trading is similar: methods which turn a consistent and long-term profit are essential for success.
• Having unrealistic expectations in a marriage, job, or business will lead to unhappiness and failure just like it will in trading. You have to set realistic expectations so
you do not get discouraged easily and quit in any of these areas. You have to be satisfied that the results are worth your effort over the long term. You need to understand what to expect before you begin a marriage, a job, a business, or trading. (more…)
Psychological testing
The following questionnaire asks you to assess your emotional experience during your trading. Specifically, you’ll be rating how often you’ve experienced the following feelings over the past two weeks. Below, I’ll explain how to score the questionnaire; please complete the items before looking at the scoring. My next post will explain how to interpret your results.
Please use the following scale for your responses:
1 = rarely
2 = occasionally
3 = sometimes
4 = often
5 = most of the time
1) I feel happy when I’m trading __5___
2) I feel stressed when I’m trading __1___
3) I feel alert and energetic when I’m trading __5___
4) I feel discouraged when I’m trading __1___
5) I feel capable of succeeding at my trading __5___
6) I blame myself when my trading doesn’t work out __5___
7) I feel satisfied with my trading results __5___
8) I feel edgy and frustrated when I’m trading __1___
9) I feel in control of what happens in my trading __5___
10) I make impulsive decisions when I’m trading __1___ (more…)
Stress hormone linked to financial crisis
The stress that financial traders suffer during periods of high volatility in the markets reduces their appetite for risk, according to a study led by Cambridge university neuroscientist and former Wall Street trader John Coates. This may prolong financial crises.
The research, published in Proceedings of the National Academy of Sciences, combines field and lab work. Prof Coates and colleagues discovered that levels of the stress hormone cortisol increased by 68 per cent on average in a group of City of London traders over eight days in which market volatility increased.
The scientists took this finding to Addenbrooke’s Hospital in Cambridge where they used pharmacology – hydrocortisone tablets – to raise cortisol levels in volunteers, also by 68 per cent over eight days. Participants then played an incentivised risk-taking game. The appetite for risk collapsed, by as much as 44 per cent according to one measure, in those with raised cortisol. (The study was double-blinded with a control group taking dummy tablets.) (more…)
Trading Principles
• In life, as in trading, the right mindset is crucial for success. You must be confident in your decisions because they are based on cause and effect, not on emotions or opinion. Negative people who are unsure of themselves are not successful in any field. You need faith in yourself and your methods to be able to persevere and not give up before reaching success.
• You can risk too much and lose it all in your business, life, marriage, friendships or family. You have to measure the potential cost of every action. One affair can cost you your marriage, just like one big trade with too much risk can cost you all your capital.
• In business there are certain methods which bring in customers and turn a profit, and others which cause a business to turn away customers and lose money. Trading is similar: methods which turn a consistent and long-term profit are essential for success.
• Having unrealistic expectations in a marriage, job, or business will lead to unhappiness and failure just like it will in trading. You have to set realistic expectations so
you do not get discouraged easily and quit in any of these areas. You have to be satisfied that the results are worth your effort over the long term. You need to understand what to expect before you begin a marriage, a job, a business, or trading.
• Those who succeed in all areas of life are the ones who can manage stress the best. The best way to manage stress is to increase what you can handle step by step so that you grow into new circumstances. Another way to manage stress is to avoid actions which get you into situations you are uncomfortable with.
PSYCHOLOGY & RISK for New Traders
The issues faced by the New Trader are greed, stress, impatience, fear, and lack of desire to learn. “When a new trader enters the stock market with money but no experience, the odds are he will quickly gain experience by losing money.” RISK The New Trader must make managing money a priority, run trading like a business, control trading size, admit when he is wrong, and lock in strategy driven profits. “When you go to your computer to trade, you should approach it as if you are entering an auction, not a casino.” |
5 Principles of Leadership and Trading
What are these principles?
- Knowing why you are in the trading business
You can start by asking yourself:
- Why are you in the trading business?
- What was your initial attraction to trading?
- Are you thinking about it as a business or a hobby?
- Are you passionate about your trading?
- Does trading feel like a lot of work?
- What are your trading goals?
- Are you enjoying the journey or just focusing on the end result?
- What do you want to get out of trading?
- Money
- Excitement
- Challenge
- Power
- Other things (more…)
Goals reduce your current happiness
When you’re working toward a goal, you are essentially saying, “I’m not good enough yet, but I will be when I reach my goal.”
The problem with this mindset is that you’re teaching yourself to always put happiness and success off until the next milestone is achieved. “Once I reach my goal, then I’ll be happy. Once I achieve my goal, then I’ll be successful.”
SOLUTION: Commit to a process, not a goal. (more…)