{"id":1893,"date":"2015-03-31T10:25:59","date_gmt":"2015-03-31T09:25:59","guid":{"rendered":"http:\/\/www.tradersnest.com\/?p=1893"},"modified":"2015-04-27T13:18:03","modified_gmt":"2015-04-27T12:18:03","slug":"5-steps-to-managing-forex-trading-stress","status":"publish","type":"post","link":"https:\/\/www.tradersnest.com\/articles\/5-steps-to-managing-forex-trading-stress\/","title":{"rendered":"5 steps to managing Forex trading stress"},"content":{"rendered":"
<\/div>\n
Control minds like Derren Brown \u2028<\/span><\/span><\/span><\/strong><\/span><\/div>\n
(and why you should start with your own)\u2026<\/span><\/span><\/span><\/strong><\/span><\/div>\n
<\/div>\n
Controlling your emotions \u2013 that\u2019s all successful trading boils down to…\u2018Don\u2019t be greedy; work on a fear of pulling the trigger; adjust your position size until it lets you sleep easy at night \u2026\u2019<\/p>\n

They are all great pieces of advice. But have you ever stopped to think how emotional responses get triggered in the first place?\"\"<\/p>\n

Delve into the world of psychology and how your brain works and you discover it all revolves around some startlingly simple processes.<\/p>\n

Really get to know your stuff and you\u2019ll find there are ways of hacking the system and controlling how the brain responds to given situations.<\/p>\n

It\u2019s how stage hypnotists pull off impressive mind-control effects to the delight of their audience, and how hypnotherapists help people knock nasty habits on the head.<\/p>\n

Control your broker’s mind \u2013 turn losing trades into winners!<\/strong><\/span><\/p>\n

Did you ever see the Derren Brown TV programme where he went to the greyhound races?<\/p>\n

He asked a lady to put a bet on a dog at one of the on-course bookies. When it lost, he had the lady go up to bookies’ window and say \u2018This is a winning ticket; this is the ticket you are looking for\u2019 (or something along those lines). And he also banged on the counter with his hand \u2013 a distraction that was key to the trick\u2019s success in some way I guess.<\/p>\n

Lo and behold, the bookmaker\u2019s clerk paid out on the losing ticket!<\/p>\n

When asked why she had done it, she was at a complete loss for words. Couldn\u2019t even begin to explain. (She was even convinced her computer had told her the bet was a winner!)<\/p>\n

Now how about that for a power? Imagine being able to phone up your broker and perform Jedi mind tricks, turning losing trades into winners: \u201cThis is a winning<\/em> trade. This<\/em> is the exit price you are looking for.\u201d<\/p>\n

It\u2019d be a great thing to fantasize about for a while. But it wouldn\u2019t take long for your little ruse to be uncovered…<\/p>\n

And it would be TOTALLY unethical of course!<\/p>\n

So instead of that, working on your own mind (and not of trying to trick the mind of someone else) is an option that\u2019s always available. It\u2019s completely ethical and that\u2019s where the long term benefit lies anyway.<\/p>\n

Here\u2019s what I\u2019ve learned recently about how the brain processes incoming data\u2026<\/p>\n

You\u2019ll see how it can create a stress response in your body, how THAT can have a negative effect on your decision making when it comes to trading, and I\u2019ll also give you an idea of how you can start improving things.<\/p>\n

How your brain works when trading<\/strong><\/span><\/p>\n

Your brain responds to stimulus. When it comes to trading, we\u2019re dealing with external stimuli (things that happen outside your mind and body). And your brain filters each individual event as either threatening or non-threatening.<\/p>\n

So imagine logging in to check progress on a trade\u2026<\/p>\n

Things are going in your favour, the trade has almost reached your target and you move your stop loss to lock-in a good chunk of profit. That\u2019s processed as a non-threatening situation. And you are rewarded with feelings of calm and well being (feel-good chemicals serotonin and dopamine and released into your nervous system).<\/p>\n

Now imagine the opposite situation\u2026<\/p>\n

The trade is moving against you and you see red numbers in your profit\/loss column. It marks damage already done to your account.<\/p>\n

It can be difficult to control your natural response to this type of stimulus. You brain can process it as a highly-threatening situation (even though on a logical level, you know that losses are simply part of the game), your sympathetic nervous system starts firing up\u2026 and now it\u2019s crunch time!<\/p>\n

Your sympathetic nervous system is what gives you the good old \u2018fight or flight\u2019 response.<\/p>\n

Reach the point of it triggering and you risk trashing your carefully tested strategy. Fighting the market with \u2018revenge\u2019 trades is common here; as is bailing out of the trade \u2018before things get worse\u2019, even though your strategy clearly says you should stay in.<\/p>\n

Yes, your in-built survival mechanism actually starts to work against you. And this is the exact point at which traders can start to go astray.<\/p>\n

But there\u2019s a small window of opportunity that\u2019ll let you control your state of mind before launching into fight or flight mode (and don\u2019t worry if you miss it, there\u2019s still something you can do to manage things).<\/p>\n<\/div>\n

<\/div>\n

5 steps to managing Forex trading stress<\/strong><\/span><\/span><\/p>\n

1) Spot your incoming stress sign<\/strong><\/p>\n

You just need to start paying attention to recurring physical feelings that let you know your fight or flight mechanism is igniting.<\/p>\n

It might be a tightness in the throat, tension in the chest, a swirling sensation in the stomach. It\u2019s different for everyone. But there will be a sure sign an emotional response is on the way\u2026<\/p>\n

2) Put the brakes on now (if possible)<\/strong><\/p>\n

So you\u2019ve noticed your recurring physical sign and you can tell your fight or flight mechanism is about to kick in.<\/p>\n

You now have a very short window of time to acknowledge this is the stage you\u2019re at and to break the state.<\/p>\n

It takes a bit of practice but visualisation techniques like\u00a0cinema of the mind <\/a>can be used here (you just need to act fast enough).<\/p>\n

Do the job well and you\u2019ll quickly correct your response, stop the full-blown emotional response in its tracks, and be able to carry on business unaffected.<\/p>\n

3) Remove the ability to do damage<\/strong><\/p>\n

If you didn\u2019t catch things in time at step 2 (and it does take a bit of practice), you\u2019ll now need to let the sympathetic nervous response take its course.<\/p>\n

Your body will flood with fight or flight chemicals and there\u2019s little you can do until your nervous system has flushed itself clean.<\/p>\n

This doesn\u2019t mean it needs to affect your trading decisions though!<\/p>\n

You simply need to remove yourself from the trading screen for a while (removing the risk of emotional actions damaging the integrity of your strategy).<\/p>\n

Go for a walk, take it out on a punch bag in the garage, go and chop some logs in the garden\u2026<\/p>\n

Just keep yourself out of mischief for about 20 minutes \u2013 that\u2019s how long it\u2019ll take your nervous system to reset itself. (A physical activity does work really well if it\u2019s possible for you at the time.)<\/p>\n

4) Analyse what triggers your fight or flight response<\/strong><\/p>\n

So once your nervous system has returned to normal you can start analysing exactly what tends to trigger the fight or flight response in you.<\/p>\n

It\u2019ll be related to fear at some level, and not necessarily a fear losing money. It can be something more deep-seated like a fear of \u2018being wrong\u2019.<\/p>\n

And once you know exactly what you\u2019re dealing with you can start to improve things\u2026<\/p>\n

5) Practice engineering more appropriate responses<\/strong><\/p>\n

A technique called \u2018reframing\u2019 can be helpful here: instead of looking at losing trades as an assault on your skills, you can reposition them as investments made in future profits. This can help neutralise the fear of being wrong.<\/p>\n

And consider this \u2013 it\u2019s probably the most useful trading exercise I ever performed\u2026<\/p>\n

Aim to take a string of DELIBERATE losses in quick succession and then reward yourself for doing so. It can quickly blunt any sensitivity to taking trading losses.<\/p>\n

Rehearse performing the responses you feel are most appropriate and most helpful \u2013 with money at stake for added realism \u2013 and you can go on to reap the benefits for years.<\/p>\n

There\u2019s nothing shameful or negative about experiencing stress when trading; it\u2019s how you handle it that makes all the difference!<\/p>\n

Be Prepared: Market Moving Data Coming This Week (London Time)<\/strong><\/span><\/p>\n

Wednesday 1st April:
\n08:55\u00a0\u00a0 \u00a0EUR\u00a0\u00a0 \u00a0German Manufacturing PMI
\n09:30\u00a0\u00a0 \u00a0GBP\u00a0\u00a0 \u00a0Manufacturing PMI
\n13:15\u00a0\u00a0 \u00a0USD\u00a0\u00a0 \u00a0Non-farm employment change
\n15:00\u00a0\u00a0 \u00a0USD\u00a0\u00a0 \u00a0ISM Manufacturing PMI<\/p>\n

Thursday 2nd April:
\n09:30\u00a0\u00a0 \u00a0GBP\u00a0\u00a0 \u00a0Construction PMI<\/p>\n

Friday 3rd April \u2013 Good Friday Holiday:
\n13:30\u00a0\u00a0 \u00a0USD\u00a0\u00a0 \u00a0Employment numbers<\/p>\n

Monday 6th April \u2013 Easter Monday Holiday:
\n15:00\u00a0\u00a0 \u00a0USD\u00a0\u00a0 \u00a0ISM Non-Manufacturing PMI
\n
\nHave a lovely Easter Holiday (perfect time for doing a bit of trading self-analysis!) and I’ll catch up with you again very soon.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Control minds like Derren Brown \u2028 (and why you should start with your own)\u2026 Controlling your emotions \u2013 that\u2019s all successful trading boils down to…\u2018Don\u2019t be greedy; work on a fear of pulling the trigger; adjust your position size until it lets you sleep easy at night \u2026\u2019 They are all great pieces of advice. 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