Undoubtedly however, trading can be a taxing experience on your mental health. You are constantly faced with decisions that need to be made and can easily go through the swing of emotions described earlier. For some people, in all honesty you may also lack confidence in your own ability to trade well or lack courage of your own conviction and therefore experience another array of emotions when trading.
Books like ‘Market Wizards’ by Jack Schwager and other similar texts illustrate how successful traders have found a trading methodology that they are very comfortable with. None of them have found any magic solution to trading but they all clearly possess an inner confidence in their own ability to follow rules and their own trading plan. Undoubtedly however, trading can be a taxing experience on your mental health. You are constantly faced with decisions that need to be made and can easily go through the swing of emotions described earlier. For some people, in all honesty you may also lack confidence in your own ability to trade well or lack courage of your own conviction and therefore experience another array of emotions when trading. Sometimes trading can be quite stressful and other times it may appear as if you can do no wrong. These emotional swings and emotional stresses do impact on your mental state and can ultimately affect your trading decisions.
It may be prudent sometimes to schedule a break from trading. Therefore, close all positions before your break, or a few weeks out from the break commencing, open no new positions and allow your open positions to take their course in the time leading up to your break. The time you schedule your break may coincide with the school holidays or your Christmas break from work. This may end up being the best trading decision you make as you are able to separate yourself from some of the emotions you have experienced, and recharge the mental batteries. The requirement for a break will obviously significantly vary from trader to trader and will depend largely on your trading frequency.
One of the things stopping people thinking about taking a break is that they may miss out on some good trading opportunities. Rest assured that the market you trade is a vital part of the corporate world and will always be open for trading. This means that when you finish your two week break for example, the market will be open as if you didn’t even have your break.
Next time you open your diary, consider scheduling a break from trading.
Why Break the Trading Rules?
Money is something that affects people’s emotions and your natural instincts with money will often encourage you to break some of the time tested risk management rules, for example ‘cutting your losses’ and ‘keeping your trades small’. Most traders focus on making money and realising a loss goes against the aim of making money.Performance Monitoring
It is well accepted that this is a characteristic of the best traders in the world. They have a passion for their trading and will often and periodically review all of the trades that they have conducted including all the profitable and losing trades, and learn from them.Be Realistic
Having high expectations of yourself is a good thing however, unrealistic expectations is not. Many traders when presented with the wonderful opportunities that the market offers can be very easily led to setting unrealistic goals for their trading. This can be devastating.