Resisting the Pressure to Trade

Do You Need to Trade?

Do you find yourself needing to be in a trade? As long as you are in front of the charts, is it hard to stay out of the market? (I know some of you have a hard time pulling the trigger to get into a trade. I am not talking to you folks here!) But for those of us who have no problem taking a trade, we may have a problem not taking one.

The other day, I came to the computer to look for my trade of the day, the gap fill. There was no gap, so there was no gap fill trade. I told myself, “I won’t be trading for a while, until another really good setup presents itself.” And I didn’t trade. But I had that anxious feeling inside, like I was missing out on something.

Are You AFraid of Missing Out?

By the end of the day, I had taken several trades. Honestly, I didn’t wait for the really good trades—I jumped in too soon. I notice, when I take a trade that isn’t great, it tends to go into the red fairly soon. Then I feel anxious; I can feel it in my stomach. Conversely, when I wait for a good trade, one that follows my rules, often it goes green first and never goes into the red. These trades obviously feel much better. Can you relate? So I ask myself, “Why wouldn’t I wait for the good trades?” After all, they feel better!

Why do we enter trades prematurely? The reasons are different for each of us, and yet similar. I hear from clients of the awkward feeling they have when they’re not in a trade.  This is especially true for newer traders. There is an anxiety one experiences sitting there, waiting, thinking you are “missing out.”  Or, you may have lost money, which also creates anxiety. Then the goal is to win back the lost money, as soon as possible.

What To Do with Anxiety?

If this phenomenon affects you, try to start noticing how you feel in your body during these times. Notice the butterflies or the pit in your stomach, or whatever it is you feel. In times like these, what you do with your anxiety (after a losing trade, for example) represent the decision points that separate the winners from the losers. It is critical to be able to tolerate the uncomfortable feelings that compel you to get revenge–taking trades that aren’t in your plan.

As you learn to trade, you are training yourself to be a robot, to repeat appropriate actions over and over. You learn to plan a setup, wait for it, execute it according to plan, and be prepared for a loss— should that be the outcome. Trading should be boring. . .

So what can you do if you tend to be impulsive? First, make sure you become aware of your feelings trading. Journal about these feelings along with recording your trades. It is helpful to write down your feelings before you take a trade, during a trade, and even when you don’t take a trade. Recording feelings helps you to recognize them.  I know this is not appealing to most traders. But, your feelings can be like a little devil inside you, making you do things you don’t want!

Create Some Structure

Creating structure and accountability can also help. One client has a rule that after every losing or impulsive trade, he does 20 pushups followed by a 5-minute rest away from the market. This is not punishment; it is a tool to disconnect the impulsive sequence and get distance from the market. It helps him to regain clarity. For another client, when he was able to deeply associate compulsive trades with pain, he stopped taking them.

What tool can you create to support yourself in taking only planned trades?

Wishing You Awareness,

Andrea Wylan, MPH, CPCC
Trader Coach

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