Why Lowering Your Stress Leads to Better Trading

The first thing that comes to mind when we think of trading is money. How much money can I earn? How much money do I need to start trading? How much money should I invest per trade? Money, money, money!
Dealing with stress when trading
Dealing with stress when trading © forexop

You might think that the more time you spend in front of the screens, the more money you earn. But the time we spend in front of the markets is not necessarily time well spent that is going to be beneficial to our performance! In fact it can be the opposite!

More Time Doesn’t Always Equal More Money

An American study compared two groups of traders. The two groups were evenly matched. They had:

  1. Similar trading experience
  2. Were trading the same asset
  3. Used the same trading strategy
  4. Had the same starting capital

The only difference was that one group worked part time (25h a week). The other group worked full time (45h a week).

In the end, the part timers outperformed the full timers. This is surprising because they spent barely half the amount of time on trading. The question is why?

Stress and Fatigue Leads to Mistakes

One reason is that trading is tiring and stressful. It requires a lot of concentration and precise decision making.

Watching the markets for long hours will generally affect your patience. So the odds of trading out of boredom or on impulse are higher the longer you sit in front of the screen.

Traders working longer are more likely to stray from their core strategy

The traders who were working longer hours did not stick to their own trading strategy.

If they didn’t reach their profits after a certain time, they took more and more risk to get the desired result. This “over trading” usually had the opposite effect and resulted in them taking losses.

Tiredness, concentration, focus and energy all play an important role in our decision making. Finding the right balance is an important aspect of trading. But fatigue won’t just hurt your profits. It affects your health too!

What are the Health Risks Associated with Trading?

Traders spend a lot of time sitting down, making rapid-fire decisions and generally operating under stress. It’s not a healthy combination.

Stress and tiredness lead to poor decision making and ultimately this will lead us to lose money.

So, what can we do to improve this? One easy step is to improve our working environment.

1# Sit less, move more

We spend most of our day seated in front of our computer screens. If we work from home, the distance between our bedroom and our office is usually not that far.

If you work from an office, you might use your car or public transportation to get there.

People who sit for long periods are more prone to depression, muscular issues, back/neck/shoulders pain, obesity, cancer and an earlier death (read more).

What can you do?

  1. Find a comfortable working posture or stand
  2. Take a break and walk around every so often
  3. Take a complete mental break from the markets every now and then
  4. Play sport or do physical activities
  5. Stretch at your desk

2# Minimize your exposure to electronic screens

With our dependency to smartphones and tablets, we spend much of our time in front of screens.

Looking at electronic screens all day can trigger visual problems, such as dry eyes, blurred vision, vascular injury, and headaches.

Our eyes prefer to look at objects that are around 6 meters away. Our computers are usually a lot closer. So this makes extra demands on our eye muscles.

The brightness and the color of our screens also play an important role.

What can you do?

  1. Make sure that your screen is not too close to you
  2. Use anti-glare screens (LCD screens are better than older ones)
  3. Switch off screens you aren’t using
  4. Put the main screen at eye level or a bit lower
  5. Reduce contrast and brightness
  6. Make sure that your main source of light is not directed to your face or onto your screen
  7. Use proper lighting in your working room

3# Deal with stress more effectively

Stress is always there when we trade. Stress in controlled doses isn’t necessarily bad. In fact it helps us.

However the combination of chronic stress and a passive lifestyle is very dangerous. As well as affecting our decision making, it can lead to issues like headaches, sleep loss and lower immunity to diseases.

What can you do?

  1. Have a sound trading plan with money and risk management rules.
  2. Make sure you have a plan for dealing with losses
  3. Don’t overstretch yourself. Have realistic goals.
  4. Take steps to actively reduce stress
  5. Have breaks during the day
  6. Identify your stress triggers, and avoid them as much as possible
  7. Control your emotions, so your trading won’t affect other parts of your life
  8. Set aside “me time” away from the markets

To Sum Up

To cope with stress, start by creating the best working environment you can.

A healthier lifestyle and work environment won’t just improve your trading performance. It can improve your health too.

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