The Trader Mindset: Mental Strenght Part 3
Strategies to reduce stress and how to become more resilient
What you learned in the previous two parts:
Start observing your behavior and write down any patterns you notice in a journal.
Identify good or harmful patterns to your profitability and work on expanding/changing them.
Recognize patterns that you were not aware of and try to adopt them.
Try to adopt a position of a neutral observer and document facts, not emotions.
Aim to improve your trader personality and mental strength day by day, this will lead to improve your profitability.
Break down your goals into small, achievable steps and think in different time frames (daily, weekly, monthly).
Set task-oriented goals that are associated with implementation strategies, trading setups, and trading plans.
Create subgoals to experience regular experiences of success and improve your self-confidence and mental strength.
Learn to deal with stress in a positive way by shifting your beliefs and ideas about trading to take out the negative stress.
Reflect on your beliefs and goals and study them with questions like: Do these beliefs put pressure on me? Do they help me to grow or do they make me a slave? Do they pressure me to go into trades?
Contents:
Avoiding and reducing stress
How to become more resilient
Avoiding and reducing stress
A burning question most traders are going to ask is how to reduce stress while trading.
Sustainable stress management goes deep and explores the roots and causes of stress.
The main reason is to prevent stress instead of “curing” it.
Here are some short and long-term measures to prevent stress:
Take breaks from trading during the week
Release the tension inside you (e.g with sports)
Distract yourself with another topic (that’s why I started writing)
Long term:
Identify your stressors* (what starts the fire inside you?)
Avoid stress by correcting and adapting your trading
Trade with less risk
Don’t trade every day
Do only one or two trades a day
Change of attitude to the stressors* you can’t change
* stressor: something that causes stress (= great worry or emotional difficulty)
Cambridge Dictionary
To be honest: You can’t change most of the stress factors in trading. But you can learn to recognize the stress factors early and try to get something positive out of it.
How so? If you can consciously perceive your stress triggers you can control your response to them. But this needs a lot of self-reflection and the methods you learned in the previous two parts.
But when you learn more about yourself and your stress factors you going to be able to break old patterns. That’s how you avoid the stress traps.
Another tip I can tell you is to stop following too many markets on too many screens.
It’s distracting and leads to sensory overload. I follow currently only two markets:
US500 (the E-Mini S&P 500 alternative for Non-US traders)
NAS 100
That’s all. I only trade these two markets and nothing else. So I’m very concentrated on only two markets and know exactly what’s going on.
Too much information from different markets adds no value to me.
How to become more resilient
What makes a resilient trader?
Resilient traders can control themself so that they maintain an overview and implement suitable stress reduction strategies.
A trader is not resilient by nature. It’s a predisposition that presupposes certain personality traits and can be initiated and strengthened by training.
Some of these traits are:
Solution and goal orientation
Accepting what comes your way and staying calm
Being optimistic and having a positive self-image
These properties help you to protect yourself when you get hit by the market and a plan does not work out. They help to prevent stress traps when dealing with markets.
What does this mean in practice? —>
Practice non-attachment by not identifying with losing trades
Manage to cope better with difficult market situations
Dissociate the outcome of a single trade from your self-esteem as a trader
Your trader personality influences how you see the market in combination with your experience.
When you assess these two aspects (personality and experience) it explains why traders with different personalities and experiences have such varying experiences when it comes to markets.
Strategies for Building resilience:
Accept that change is a part of living
Avoid seeing crises as problems
Move towards your goals
Take care of yourself
Make social connections
What’s next?
The next step is to develop your own trading system after you achieved Mental Strenght.
That will be interesting but need some preparation time.
Await my next newsletter in two weeks!
Another fantastic post, Mr. Meme!
I really found in interesting that you trade just those two macros. When I was day trading, I would largely trade anything and everything, especially if there were massive prints in the dark pool and could catch the momentum.
But, to you point, I was paying attention to too many things at once and often had multiple trades open (difficult). Not that I'm looking to jump back into trading, but even reading your newsletters provides a lot of insight for how to do this if I wanted to trade once in a while.
Have an awesome weekend, my friend!