How To Manage Anxieties Related To Trading
As we go through our month-long dive into trading wellness, I felt a need to talk about anxiety surrounding trading. We all experience it in one form or another, but I find we don't always realize the root of the anxiety. While we talk a lot about stress and conflict in our trading lives, we don't often talk about anxiety. Anxiety in and of itself is a much larger condition then what we will focus on today, instead we will focus mainly on trading anxiety. What is trading anxiety? It is when you second guess and fear making poor decisions with your trades for several reasons and this fear makes you unable to act or make bad decisions. I divide anxiety between anxiety caused by past experience and anxiety caused by overthinking, depending on which one you have will depend on how you will treat the issue.
1 - Past Experience Anxiety
This is the type of anxiety you have because you have had bad things happen to you in the past. You got out of a position and then saw the stock triple, or you stayed for that last dollar and missed the height and sold at a loss. Or maybe it is FOMO seeing the charts of stocks outperform when you decided not to go into them. Whatever the exact reason, the base is the same, you were burned in the past and now you are afraid of getting burned again. Once bitten, twice shy. Luckily, this is one of the easiest anxieties to fix, because it can be fixed with knowledge.
Solution - Learn your Charts
Likely a large reason why you messed up trades in the past is because you lacked the knowledge to execute the trade well. Of course this is normal! Rookie mistakes are all part of the learning process, the important thing is learning from them, instead of building an anxiety around them. Use your past mistakes as guidelines to learn the market and yourself. Sign up for private sessions with us at www.bullionite.com if you are still unsure of where you went wrong and have Mukarram Mawjood, our head trader, give you some one on one instruction. Once you understand the charts and trends in the market you will make fewer mistakes.
Solution - Learn Yourself
We all have different thresholds for risks. These thresholds also shift in our lives as we become more or less dependent on the money we have in the markets. Be honest with yourself and set your limits before making a trade. Plan your entry and exits and stick to your plan. Remember that the money you trade is best to be money you don't immediately need so you aren't compromised into making bad trades in order to get your money out. The key to combating this anxiety is to know yourself, and only you can do this and only you know the truth. Be honest and open with yourself, and watch your anxiety start to fade.
2 - Overthinking Anxiety
Sometimes the anxiety we have is just a product of overthinking or FOMO. Perhaps you got out of a trade and saw it go up a couple more dollars and now are viewing yourself as a failure because you missed out on a few hundred dollars even though the trade was very successful. Or maybe you see the chart of a company outperforming or a meme stock and you know there was no way for you to have known this was going to happen outside of a time machine, yet you still beat yourself up about it. These are not past experience anxieties but rather just a product of wishful or over thinking. This type of anxiety is harder to combat because it has to do with our emotions over our knowledge. Though with increased knowledge of the stock market you will be able to better identify if you could have made the trade or not, the main issue here is an emotional one.
Solution - Thought Exercise
Take one of your trades you feel bad about and look at the details. What was the worst thing that happened? Loss of money, maybe a lot of money. Ok, this is never a fun thing, but is the money gone forever? No, of course not. Because the markets give you the power to create wealth, you can create more wealth for yourself. Not every trade is going to be stellar, but your overall average will still be good. Remind yourself that this is not a reason for anxiety. Keep growing, but remember growing isn't a straight path up, if this were easy the reward wouldn't be as great.
Learning how to identify the roots of your anxiety is the first step in becoming a better trader. Keeping up with your education of not just the markets but of yourself will help you reach your fullest potential. Remember that only you can put this work in for yourself. Not only will this help you become a better trader, but it will help you in all aspects of your professional and personal life to learn how to identify where your anxiety is coming from. Take the time, put the work in and see where it takes you. Visit our blog at https://www.bullionite.com/blog-index each week for the next part of the series. Reach out to us at info@bullionite.com with your comments and questions!