Let’s be honest. It is incredibly easy right now to feel stressed especiallywhen trading.
It happens to the best of us, and I’ve been frustrated the last few weeks and actually stepped away for a few days to clear my head.
Especially when there’s so much uncertainty in the market, it’s important to understand when to push it and when to hit the brakes.
When it comes to trading, there’s one area that always gets neglected — psychology.
Today, I want to show you one psychological factor that can impact your trading, and why you’ll want to focus on it right now.
It doesn’t take much to have that prickling feeling sneak up on you.
Seriously, if you look at all the headlines out there, it paints a picture of fear and uncertainty.
Of course, we are smack dab in the middle of an election cycle and an uptick in cases of the deadly virus.
If you think you’re the only one who deals with fear, think again. It’s all part of human nature.
Long ago this emotion was linked to facing down terror. Cavemen deciding to take down a beast for dinner or get the hell out of there.
Many years later a single finger hovering over a keyboard can get this same reaction.
And we can all thank physiologist Walter Cannon for letting us know that we aren’t crazy. It’s 100% natural and it’s definitely hurting your trading game.
The mind races… What if?
What if I lose it all? What if I cash out too soon? What if I waited too late to sell? What if I’m entering at the wrong time?
What you are feeling has been around since the beginning of time. ─ the fight or flight response.
Adrenaline is up. Heart rate climbs. Breathing increases. Muscles tighten. The loud drumming of “What do I do?!?” is running through your brain.
And the bad news is it can happen anytime to anyone. Even most successful traders feel the pull of fight or flight…. But giving in to that urge isn’t how I became successful.
Fight and flight can wreak havoc on your trades.
It can cause people to pull the ripcord and bailout of a trade before it reached its prime. Go into a panicked freeze or walk away. Causing them to miss golden opportunities.
The fight can be just as dangerous. Taking on losing battles. Letting loser trades go long.
Getting swept up in the moment costs money… Money I don’t like or want to waste.
How To Manage Fight Or Flight
Managing fight or flight is a matter of having the right tools and strategies.
And remember every single trader deals with fight or flight… and if they say they don’t they are a dirty liar.
The difference is successful traders know how to handle this animalistic urge rather than letting it rule them.
No lie ─ it’s been a challenge for me at times, that’s why it’s important to develop the skills and tactics to handle it.
One of the easiest ways to do this in my opinion is to plan ahead of time.
For me, I like to look to chart patterns to identify plays. Then I can look for potential entry, target, and stop-loss areas.
You see, if you can manage expectations and play out different scenarios…
Then I truly believe you can actually use the fight or flight to your advantage.
For example, if you have a plan in place but the market is selling off and you know your pattern doesn’t work in choppy environments… you can just hit the “flight” button and not execute the trade plan.
On the flip side, if you have a pattern that works extremely well in this environment, then you can plan to press it on the trade.
Whatever the case may be, it’s important to not only plan your trades, but also know what your edge is in them.
If you don’t have an edge in the market, then I’m sorry to break it to you… but you’re in trouble.
However, I’m here to help and I want to teach you one of my favorite trading edges… pattern recognition… and how it can help you attack the market, while managing your psyche.