Staying Cool
What if you really have a problem not getting stressed out from trading pressure?
Experience and trading from a plan can help you to make trades in a carefree, relaxed, and focused manner. It is important that you avoid putting unnecessary pressure on yourself. Success or failure is not riding on a single trade. You make it as a trader in the day-to-day trading, learning to be satisfied with what the market hands you.
Avoid thinking you have to be right. You cannot impose your wishes on the market. Don’t try to predict the future behavior of the market—plan your trades and trade your plan.
When you are calm and relaxed, you can think. For instance, if you are long and suddenly the trade moves sharply against you. If you are thinking, you can stop the pain by writing a Call option above the market, or buying an in-the-money Put to stop the bleeding. “Oh but that will cost something”, right? Yes it will, but the cost may be a lot less than the eventual loss.
Trading from a plan enables you to maintain your poise. With poise, you can remain in control and you can think rather than react.
Here are some steps to take to ease trading pressure:
- Learn to take some profits as soon as possible. That way you will have been paid to trade. Taking profits early takes all the pressure off of a trade.
- If you are riding a trend, and you see a reversal bar, immediately bring your profit protective stop to as close as you can get in order to protect what you have suffered through to obtain.
- Keep a log of all your trades so you can look back to see where you have gone wrong. Try to record everything you have learned from all trades—both good ones and bad ones. One of the greatest problems traders have is that once they go astray, they cannot find their way back to what they were doing when they were successful. Keep a log ensures you will find you way back.
- Meditate on every trade you take. By that I mean think about the trade before you do it. Even if you are a day trader on a 1 minute charts, prior to trading picture yourself doing everything perfectly and in keep ing with your trading plan.
To the greatest extent possible, undertrade your capital. By keeping plenty in reserve a loss will not be so devastating. You may have to trade small until you can build your account to a generous size, but you will find great peace of mind if you are well capitalized.
Joe Ross
Trading Educators Inc.
Joe Ross, trader, author, trading educator is one of the most eclectic traders in the business. His 50+ years include position trading of shares, and futures. He daytrades stock indices, currencies, and forex. He trades futures spreads and options on futures, and has written books about it all - 12 to be exact. Joe is the discoverer of The Law of Charts™, and is famous for the Ross hook™ and the Traders Trick Entry™.
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