Today, we are tackling how to reduce stress in trading.
We are going to attack this problem from two points of view – a philosophical view and a practical view.
First, consider the philosophical aspect of stress.
Stress occurs when there is a want.
And something is blocking you from what you want.
For example, you want to win every trade.
But somehow, the market is not cooperating and preventing you from achieving what you want.
This causes stress.
To eliminate this, either of two things must happen.
Either the market cooperates, or you change what you want.
Trying to change external factors can be difficult, if not impossible.
So we try to get internal factors to change.
We change our wants.
There is no stress if we no longer want to win every trade.
Even if we cannot completely eliminate our wants, if we reduce them, we decrease our stress proportionally.
This is not just applicable to trading. It applies to life in general.
To give you a general example, suppose a student wants to get an “A” in the exam tomorrow, so he studies very hard the night before.
But he is stressed because there is too much to study and not enough time.
Suppose another student also has an exam tomorrow but is not interested in getting an “A” or an “F.”
Do you think this student is more or less stressed?
Maybe this is why overachievers are more likely to be stressed than non-overachievers.
We must all find our balance between ambition and contentment.
Some people are content to get a “C” on the exam, while others are content only when they get an “A.”
Practical Considerations
If you are feeling stressed in trading, reduce your position size.
If you have less money on the line, you have less of a need to win the trade.
This is a practical way of reducing your desire to win the trade.
Remember, less desire means less stress.
Another way to reduce stress in trading is to trade mechanically.
That is to follow the rules of the strategy precisely instead of using discretionary judgment – with the understanding that the rules of the strategy cannot spell out every possible scenario and that there is always some discretion in every trade.
By trading mechanically, you remove the emotion out of trading.
Stress is an emotion.
If you reduce emotion, you reduce stress.
Conclusion
While some stress can be good, chronic stress can harm health and overall happiness.
Reducing wants and practicing contentment can be effective strategies for reducing stress.
Many stressors in life arise from unmet desires and the constant pursuit of more.
When we desire something intensely and feel that we must have it, but it remains out of reach, it can lead to frustration, anxiety, and stress.
By embracing a mindset of reducing wants and finding contentment with what we have, we can experience greater peace and well-being.
From a practical point of view, this can be partly achieved by reducing trade size and trading mechanically.
We hope you enjoyed article on how to reduce stress in trading.
If you have any questions, please send an email or leave a comment below.
Trade safe!
Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.
