Most people think of trading as a very risky way to make money. And while it can be, if you’re not prepared for the emotional stress that comes with it, you’ll likely find yourself losing money instead of making it.
In this article, we are going to discuss some tips on how to cope with stress in forex trading so that you can stay focused and make smart decisions.
Let’s begin now.
Why FX trading is considered a stressful job?
Some people think that it is impossible to get rid of stress. But this isn’t true. It is helpful to feel bad emotions when you make a mistake. This will help you avoid making the same mistake in the future. The problem with Forex trading (and any other financial trading) is that not all stressful events are caused by mistakes.
For example, it is totally normal for people to feel anxious about each one of their losses. However, feeling stressed about every loss is not useful to a Forex trader. Those losses are a normal part of the trading process. At the same time, one would be right to be stressed when a trade executed by mistake ends up being profitable by pure luck.
Why it is important to deal with stress
Most new traders who have just moved from using a demo account to a live account worry almost constantly while they have an open trade. Even experienced traders may feel depressed after losing a few trades in a row, even though this is to be expected. Some things that can make Forex traders feel stressed are increased volatility, unexpected news announcements, or unreliable brokers as well. To minimize your level of stress you should give preference to FCA-regulated brokers as a reliable option. Or if the broker is not enough to decrease your stress level – get acquainted with turnkey solution providers that can be included in your list of the most necessary tools to trade.
If you’re feeling too much stress, it may cause you to abandon trading altogether. Forex traders have to make quick decisions that can make or break their careers. The markets are always changing, and even a small mistake can lead to big losses. At the high of your stress, you may not trust not only liquidity providers or brokers but even yourself and your trading skills. That’s why it’s so important for traders to find ways to deal with stress.
Here are some points we have outlined to help you cope with stress levels:
Acknowledge that you are stressed because of trading.
The first step to overcoming stress is admitting that you are feeling it. When you are feeling anxious or overwhelmed, it is important, to be honest with yourself.
Take note of your, thoughts, emotions, and actions, and write them down in your trading journal for future reviews. This will help you identify your triggers and work on managing your reactions.
Take a break and try to relax
It is important to take breaks from looking at your charts and all data. This will help you stay focused when you are trading. If you do not take breaks, you might start making mistakes. This can be bad for your trading success. When you take a break, do something different to relax your mind. When you come back, you will have the focus you need to succeed.
Try exercising physically and mentally
Working out at a gym can be a great way to relieve stress. If you don’t like going to the gym, there are other options, like running, swimming, yoga, or walking outside early in the morning. You should also work your mind by playing games that make you think hard and help you make better plans.
Try to identify the reason for your stress
What is making you feel stressed? The sooner you can identify the source of your stress, the sooner you can eliminate it.
When you know where your stress is coming from, it can be easier to deal with. Sometimes, it just takes an objective assessment of the situation to clear your mind and look at things from another perspective. In some cases, determining the reason for your stress can also help you reduce it in the future.
Learn your lesson and work on your mistakes
If you take the latter approach, then losing can actually be a good thing. It can teach you what not to do and help you become a better trader overall. Next time you lose, don’t get too down on yourself – just try to learn from the mistakes you made and use them to improve your trading skills.
Switch the strategy if the one you are using is constantly letting you down
When you’re not doing well with your current trading strategy, it might be a good idea to switch to a new one. But you need to be sure that the loss was caused by using your current strategy, and that the same thing or worse could happen again in the future. If it’s a mild case, then switching to a smaller position size might be a better solution.
Remember that losses are not the end of the universe
When you lose, it is not always a bad thing. You cannot win every game, so sometimes you will lose. There are two ways to handle losing – you can let it bother you and make you stressed, or you can learn from it, figure out what went wrong, and make sure you do not make the same mistakes in the future.
When it comes to Forex trading, stress can be a major obstacle to success. However, there are ways to overcome the fears and stress that often come with this type of investment. By developing a positive mindset, creating a plan, and using the tips we have mentioned in the article, you can stay calm and focused in even the most chaotic market conditions.