October 24th, 2016 → 12:23 pm @ reacoms
As we all know professional traders are making more money from day trading from the comfort of their home, but majority of traders who enter in to day trading has been failed. They felt like day trading is a heartless business with more stress in day trading. Some days, you cannot find any trades worth making profit. Other days, you find trades, but they don’t work out the way you want them to. And some days, there are too many good trades, more than you can possibly make, and so you watch profitable opportunities slip away. When you are working with real money, all this stress can be too much to take.
A trader can find awesome companionship in a money management or brokerage firm. But they work for the same employer and stick together to drive off the stress in day trading. What do you do at home, how you going to avoid stress in day trading? How do you keep from panicking, getting depressed or otherwise letting this business hurt your profits and hurt you?
If you are going to day trade, you need to understand the very real physical and psychological stresses that the market pushes on its participants. In this blog, I offer some information and advice that can help you avoid a crisis, hope this blog can help you ease out your stress in day trading.
Observing the story of those who failed in day trading is loaded with stories of people who flamed out in spectacular and destructive ways. People who work on trading desks or on trading floors tell tales of colleagues who freaked out, walked off the desk, broke down in the pit, or died at the trading post. They can name colleagues who are alcoholics, who suffered bitter divorces, who committed suicide. Even though day traders usually work by themselves, stories of their self destructive behavior proliferate.
Don’t be the person who finally gives researchers enough critical mass to report on day trader self-destruction. Stress is a real part of day trading, and not all day traders handle it well. If you know what you’re up against and prepare for it, you’ll be better off than many.
In fact many, probably the most, day traders are leading happy lives and endure no more problems or stress in day trading than any other person. That is because they have perception, balance, and a personality that matches the demands of the day trading business. The following sections offer a few cautionary tales of traders who surrender to the pressures inbuilt in the job.
The key to successful day trading is controlling your emotions this is the main key point to keep out the stress in day trading. Traditional in financial market is based on the idea that traders are rational. In practice, however, most of them are not. In fact, traders and investors are often irrational in fully expected ways, which has given birth to a growing area of study called behavioral finance. If you can’t figure out a way to manage your reactions to the financial markets like FOREX, MCX, NSE, COMEX, etc, you should not be a day trader. Almost all day traders talk about their enemies being fear and greed. If you panic, you’ll no longer be trading to win, but trading not to lose. That’s an important distinction: If your goal is not to lose, you won’t take appropriate risk, and you won’t be able to respond quickly to what the market is telling you.
Controlling your emotions is all much easier said than done. Human beings are emotional creatures, constantly reacting (and sometimes overreacting) to everything that happens in their lives. Knowing the emotions that affect trading and having some ways to manage them can greatly improve your overall performance.
In day trading, the big emotions can take over and mess up your strategy and your returns. The enemies are doubt, fear, greed, anger, anxiety and depression. At this point in your life, you may already know whether you have tendencies toward any of these emotional moods. If so, trading can make worse them. If you’ve never experienced them, you may for the first time. The following sections explain these emotions as they relate to day trading so that you know what you’re up against and can plan accordingly.
Day traders have to act fast. They have to place their buy and sell orders as fast when the opportunities present themselves. The market doesn’t give anyone time to second guess for the decisions, but many traders start to do just that. Did the signal really flash? Is this pattern going to continue or reverse? Will waiting a few seconds lead to a better price? Would closing out for the day just be better?
I don’t know. And neither do you. That’s why traders need to stick to their plans, which isn’t always easy. Back testing or paper trading your technical analysis software for perfect buy sells entry points and exits can help build confidence in your trading plan, and get familiar with your trading platform can help overcome the buy or sell entry delay, this will help to out stress in day trading.
Most brokerage firms guide you to familiar with the trading platform and secondary your technical analysis software. You have to get familiar with all the features of your technical analysis software, and ask the support team of your software provider if you have any doubts in picking confirmed buy or sell signals with targets and stop loss, which can help you get out of positions based on your plans rather than your emotions.
Fear is one of the worst emotional enemies of the day trader. Instead of trying to make money, the fearful trader tries hard not to lose it. He is so afraid of failing that he limits himself, doesn’t take appropriate risk, and questions her trading system (technical analysis software), so much that he no longer follows it, no matter how well it worked for her in the past.
The only way to limit fear is to have a plan for the trading business, have faith in your trading system or buy sell signal system. Before you start trading, take some time maybe half a day to sit down and think about what you want, what will happen to you if you get it, and what will happen to you if you don’t. For example, if you lose your trading capital, then you’ll have to live on your walk-away fund until you find another job. If you make a lot of money, then you can pay off your mortgage.
Greed seems like a silly thing to have on this list. After all, isn’t the whole purpose of day trading to make money? This isn’t charity; this is entrepreneurship at its purest. Traders who get greedy start to do stupid things. They don’t think through what they are doing, and they stop following their trading plans. They hold positions too long in the expectation of making huge return, and sometimes mainly after the success of first one or two trader, they make rash trades that look like gambling. The greedy trader loses all discipline and eventually loses quite a bit of money.
If your goal is simply to make more and more money, you may have a problem with greed. Sure, everyone wants to make more, but there are also a basic need-to-make number (enough to cover your costs and your basic living expenses) and a want-to-make number (enough to cover costs, basic expenses, and extras that are important to you). Your want to make can be open, but your need-to-make should be a key component of your risk management. If you know what those numbers are, you’re well on your way to preventing the problem.
As we discussed in our previous blogs a disciplined trader should put Stop Loss and Target orders immediately after placed the Buy or Sell orders, which automatically close out positions when they hit set price levels, are one way to force discipline in the face of greed.
The financial markets can be frustrating. They don’t do what you want them to, and that often costs you real money. And no one wants to lose money in trading. Your anger at the markets can cause you to stop seeing the good buy or sell opportunities and will lead you to making lose in day trading.
When anger makes it impossible to think clearly, the only thing you have to do as a disciplined trader is close out your positions, and go somewhere far from your trading room. Leave your phone at home if you are using your broker’s mobile apps, too! Take a long walk and wait for your anger to subside. Otherwise, your rage will obstruct with your plans and your profitability.
Anxiety is the anticipation of things going wrong. Anxious people worry, struggle, over analyze, and generally stress out. And then they avoid whatever it is that makes them upset. That means that a trader may not make an obvious trade but instead hesitate and miss a market move. He may hold on to a losing position too long because he is worried about the effect that selling it will have on his portfolio. He becomes too nervous to trade according to his plan, and his performance suffers.
Like we discussed early the only one way to reduce the anxiety is through put proper stop loss and target as per the trading systems (technical analysis software) says. If your limits are set when you place the trade, then your anxiety can’t override your plan. And as a trader to reduce the stress in day trading most of traders are look in to the exciting things like surfing social medias, this is a bad habit. You have to block access to social media on your trading computer. Those seems to be silly things, but by following these simple things you can avoid the stress in day trading with the emotion anxiety.
Depression is a severe downturn in your mood, especially one that causes you to feel insufficient and lose interest in things you used to like. Even though everyone is subject to depression, the ups and downs of the market can make traders particularly susceptible. At best, depression can make it hard for a trader to face a day with the market.
As a trader exercise keeps your body in fighting shape so that you can stand up to market stress and react to trends when you need to. Many times when you are trading, you have huge rushes of adrenaline that you can’t do much about. You have to stay in front of your screen until the trade is over, no matter how much you want to run away screaming. But after the trading day, you can hit the track or pool or treadmill and burn off some of that adrenaline. Figuring out a regular exercise routine can pay off for your trading.
Meditation When you’re trading you will caught with the stress in day trading. You may get upset and start thinking about everything else that has ever gone wrong in your life, instead of staying focused on the trading opportunities, you will ignore what your technical analysis software suggest for perfect buy or sell entries. Even after you close out your positions and shut down your monitors, your day’s trading may keep playing itself out over and over in your head, making it impossible for you to relax. Neither of these scenarios is good for you or your trading.
Trading requires mental discipline. Good traders can keep their minds clear of everything but their trading system, a trading system (technical analysis software) is your best friend and companion while in trading. You have to follow as per the trading systems suggests for most perfect buy sell signals. One way to develop that discipline is to take up meditation. If you have trouble keeping your focus, you really may want to give it a try to avoid stress in day trading. There are an almost infinite number of meditation styles, many of which are associated with different religious traditions, so you can surely find something that works.
Day trading is a lonely activity. You work by yourself all day. It’s just you, your room, and your screen and your trading system. This job is really isolating you from others. If you don’t get other human contact, you run the risk of personalizing the market in order not to feel so lonely. That’s bad, because the market isn’t a person; it’s a collection of all the financial activity taking place, and it has no interest in you whatsoever.
No matter what you do in life, you want to have the support of the people you know and love. And you need to make time for them, too. Start and end your trading day at regular times and be sure to make plans to see people who are important to you. Going to your kid’s favorite game, having dinner with your spouse, and seeing your friends for a few beers on a regular basis can go a long way to keeping your life in balance and ultimately that will keep your trading in balance.
If you like pets, consider getting one to keep you company during the day. There’s nothing like a dog that needs a walk to force you to close shop for the night.
A lot of people get into day trading because they have long had a attraction with the market. Trading goes from being a hobby to being a living. In many ways, that’s perfect. Going to work is so much easier when you have a job that you love. But if the market is your only interest, then you’re going to be too vulnerable to its behavior, and you’re going to have trouble sticking to your trading discipline. Plus, whatever upsets you during the trading day is more likely to carry over. So it is better to find a new hobby if you don’t have one to avoid stress in day trading. Maybe it’s a TV show, a sport, or music’s, but whatever it is, you need to have something going on outside of your trading.
You may have noticed that trading plans pop up several times in this blog. That’s because they are so important to maintaining the discipline that leads to trading success. You have to know what you’re doing and how to recognize entry and exit points and then go and do it. below, I tried to demonstrate how you can use a trading plan to manage stress in day trading and give you a few tips for sticking to your trading plan even as the markets sometimes move against you.
A good, tested technical analysis software sets out market patterns that work often enough that you can make good trading profits. But some people have trouble following their plan, and that leads to traumatic mistakes in trading. Following are some common problems and advice on how you can avoid or overcome them.
Anyone in a high performance situation can choke. When a trader chokes, he seems to be following the plan, but it’s no longer automatic. Trading becomes so slow and deliberative that perfect buy sell entry point gets missed in your trading. The more you trust your technical analysis software, the less likely you are to choke.
Panic occurs when you just stop thinking. You’re losing money? You start to trade more and more with our any trading plan you ignore what your technical analysis software says. And when you are making money? You close out all your trades right now so that you can’t possibly lose, even if your plan tells you to hold your positions. When you panic, you can’t think straight, and you can’t follow your plan you will ignore the perfect buy or sell entries.
When your positions are down and you seem to be losing money, you really should be buying and sticking it out so that you can make money later. The problem is that your panicked instincts are telling you to do the opposite. With experience, traders learn to avoid panic.
You’re probably going to have more than a few losing trades when you get started. In your trading diary keep notes about how losing money makes you feel. Can you handle it emotionally? If losing upsets you too much, you may not be cut out for day trading. You can’t trade with a clear head if you’re bogged down with negative thoughts.
Day trading requires a lot of confidence because you are going to lose money and you are going to get beaten up some days. Not only do you have to remain confident in the face of misfortune, but you also have to be careful that you do not cross from confidence into an magnified ego. The more your trading success and failure become part of your personal identity, the more trouble you’re going to have.
What’s the difference between confidence and ego? A confident person would say, “I’m smart enough to figure out what the market is telling me”; an egotistical person, “I’m smarter than the market.” The difference is crucial to your success.
Strong discipline is key to success in trading, but only if you’re disciplined in following the right trading system (technical analysis software). If your trading method is imperfect, sticking to it is going to hurt you and will lead you to lose more money in your day trading. If something isn’t working, don’t get mad at the system; take some responsibility and make some changes and discuss with the software support team, might be you missed some important point in to pick perfect buy sell entry points with your buy sell signal software.
How do you figure out whether your trading system is right and what changes to make? Go through your trading diary and ask yourself some questions:
One way to get your confidence back while still staying in the market is to trade in very small amounts so that your profits and losses don’t really matter. Trade 100 shares, not 1,000 shares, trade mini lots, not main lots. You give up the upside for a time, but you can also get out of the cycle of greed and fear that has destroyed many a trader. Hope now you will get some ideas how the professional traders thing, and why they making consistent money from trading in MCX, NSE, FOREX, COMEX using technical analysis software, how they confident to pick perfect buy or sell signals with the system.