How to manage stress in trading

Stress is the emotion most likely to affect your trading performance.

It appears at three critical moments:

1. Before entering a trade
2. During a trade
3. After a trade

I'll explain how to manage it in general and at each stage.

Managing stress in general

But there are simple, obvious things you can do to minimise them:

• Have a routine that prepares you mentally
• Work in a supportive environment
• Practise positive visualisation
• Exercise
• Meditate

Stage 1: Before entering a trade

As a protective mechanism, your brain pictures the worst possible outcomes to warn you about risks and help you anticipate them.

In other words, it doesn't want you to lose money...

That can take the form of an inner voice describing disaster scenarios before you've even clicked "buy" or "sell".

Managing stress at the first stage

Ask yourself:

• Why do you want to enter this trade?
• What facts and figures support it? Don't rely on intuition alone
• Have you calculated your risk properly? You can use this calculator
• Do you have a defined entry and exit plan? Do you know where to place your take profit and stop loss?

Having clear answers makes the process more rational and brings logic into your decision-making.

That helps reduce stress.

Stage 2: During the trade

Once you've entered the trade, stress and fear of failure tend to return.

Why? Because the market doesn't stand still.

Until your position is closed, it can move between profit and loss.

The movements you see on screen can make you doubt yourself, especially if your trade moves against your expectations.

Managing stress at the second stage

One obvious point: you'll manage your stress better if you answered the questions from the first stage.

Those answers reassure you that your decision was rational and justified, even if it turns out to be wrong.

The outcome, profit or loss, is therefore no longer in your hands.

You can then see it this way:

You also need to:

• Stick to your original plan: too many traders fall into the trap of changing their minds as the market moves. Avoid this unless you have substantial trading experience
• Step away from the screen if your stress becomes unmanageable: stop watching and simply accept that your scenario may be invalidated

Stage 3: After a trade

Even once a trade is over, emotions can linger and influence your next decisions.

Managing stress at the third stage

Review your trade objectively and ask yourself:

• Did I follow my original plan?
• What caused the profit or loss?
• Was there anything I hadn't anticipated?

This helps you understand what happened and why, while giving you more confidence in future decisions.

Above all, remember:

Once your emotions have settled, you can take another trade.