Don't panic; it's a trap!

I’ve always struggled with anxiety issues.

As I started reading more about it and getting professional help to learn how to deal with my overreaction to stress, I discovered I was living under a “fight or flight” response mode. There are lots of interesting articles about this topic, so I won’t elaborate on that.

The thing is, that trading seemed to be the oddest option to a person with my psychological traits.

I am a professional coach so I should know better how to control emotions, but I can now confess how unsure I felt when I started doing trading as my main professional activity.

I got so obsessed about understanding trading psychology that I eventually ended up reading more about psycho-trading than technical analysis. This knowledge gave me confidence, and that confidence gave me strength.

Of course, I am sometimes imprisoned by my self-doubt and fear. Those are absolutely normal feelings: I am human, and trading can be an activity as risky as doing bungee-jumping.

As odd as it might seem, it was trading that gave me the self-control competencies that I struggled so many years to develop.

Sometimes you have to jump off from a cliff to overcome your fears and trading became the obstacle I had to transcend to gain confidence and tame my fears.

I feel I must share how trading developed my self-control skills so I can help other traders, or even any professional that deals with anxiety issues.

1.     Forget the perfect

People with my characteristics tend to be perfectionists and seeking for perfection slows you down, amplifies the pressure you put upon yourself and is a great source of discontentment because you rarely achieve the excellence level you aim (or you achieve momentarily through great pain and herculean effort). In trading sometimes you loose and the sooner you learn to deal with this uncontrollable fact the more profitable you become. The trick is to control your negative trades and make your profits higher than your losses. You must become proficient in risk management not in identifying the perfect entry and exit points. You’ll never make it, believe, me, because unexpected events happen almost every day.

2.     Focus on the process

And don’t become obsessed with profits. I started out by defining a daily goal. It happens that in a bad day sometimes my end result would be negative and that would put me under overwhelming pressure to have a better performance the following day. I now have a weekly goal and I start my days by running the checklist I’ve created to identify market opportunities. I don’t panic if I don’t identify any. A bad trade is worse than no trade and keeping a strict methodology and rigorous discipline has improved my results. It also gave me control and that sense of power helped me to quiet my mind.

3.     Move slow

We live in a fast-paced society that makes you run, sometimes with no direction. When I started trading the thing I told myself was that it took me 5 years to get a management degree so I wouldn’t become a professional trader in 5 weeks, or even 5 months. I started with a demo account and, as I move to a live account, I took baby steps in terms of risk management. I confess that sometimes I got excited with my gains and exceeded myself. Those where exactly the times when I lost a greater amount of money. Overconfidence is a killer so you must move gradually because risk is a pressure magnifier that increases the chances of making mistakes.

4.     Move away

Sometimes I get almost hypnotized by candlestick charts. I used to be looking at market evolution in the 5-minute time frame, to all ups and downs that happen every second. This is dangerous. Sometimes you get so insecure that you cancel a trade that would be profitable if you had stick to your plan. One of the most common mistakes of people that chose trading as their main activity is that they look at this as a 9 to 5 job, and sometimes work overtime so they can follow up opening and closing hours on international markets. I’ve also been there. I was used to working 12 hours a day so I couldn’t keep myself away from the screen. Now I only make trades in the afternoon (when US traders start to operate) and I imposed myself a work limit of 5 hours a day. I rarely leave a trade running so, sometimes, I logoff facing losses or registering minor gains. The truth is markets run regardless my attention or dedication so when my time is up I close the deals I have and tell myself “tomorrow is another day”.

5.     Get a life

To avoid being obsessed about trading you must find other activities to feel up your time. Exercise and meditation are excellent therapies for people that deal with anxiety problems. You may also find a hobby or eventually other activity that gives you money. I write this newsletter once a week, I go to the gym 3 days a week, I go for a 1 hour walk every day and I do coaching and training to gain some extra money on a regular basis. Trading is my main activity, but it is not my only activity.

Wish I had apprehended and put in practice these rules in an earlier stage of my life. You can read a lot about psychology, you can get professional help, but behavioral change is a process that comes from within and there must be some fact, circumstance or trigger that starts a conscious and deliberate transformation process.