So how tin sack nosotros exceed away on the normal, inevitable, as well as ultimately constructive stresses of trading from becoming sources of distress? Three best practices that I'll live on touching upon inward my upcoming webinar presentation are key:
1) RISK MANAGEMENT - Trading losses should live on planned as well as anticipated. By limiting run a peril per merchandise as well as limiting drawdowns across trades, you lot ensure that whatsoever unmarried catamenia of miserable functioning volition non impair your emotional or fiscal capital. This agency that proper merchandise construction, portfolio construction, as well as reduction of risk-taking during periods of miserable functioning are every bit of import to success every bit generating the side past times side corking merchandise ideas. One of the virtually mutual trading problems I run across amid less experienced traders is that they size positions as well as predicate their run a peril taking based upon how much coin they desire (need) to earn, non on how much they tin sack afford to lose. They conduct maintain as well as therefore much run a peril that they ensure an eventual emotional upheaval.
2) PERFORMANCE FOCUS - The ever-changing nature of markets ensures that they volition examination you. They volition examination your query as well as understanding; they volition besides examination you lot emotionally. Turning the stress of challenge into fuel for increment is a corking way of staying positive, constructive, as well as complimentary of distress. Look at it this way: the marketplace is your gym as well as it's going to hand you lot a workout. What trading muscles are you lot going to build this week? This month? Turning setbacks into learning lessons as well as goals for time to come trading ensures that you lot volition purpose losses as well as drawdowns to brand yourself better. H5N1 positive functioning focus starts amongst constructive self-talk: how you lot procedure marketplace challenges volition really much behave upon your emotional responses to those challenges.
3) LIFE BALANCE - There volition live on times when markets volition non sustain you lot emotionally--and quite perchance non financially. What volition acquire you lot through the lean periods? Having activities as well as relationships that nourish you lot emotionally, physically, as well as spiritually tin sack brand all the departure inward sustaining the mindset needed for optimal functioning during hard times. Having diversified income streams takes a corking bargain of pressure level off P/L as well as makes it much easier to conduct maintain the patience to expect for skillful trades. We know that emotional well-being contributes to creativity, productivity, as well as positive performance. The best way to avoid distress is to build a life buffer of well-being.
So, every bit I'm writing this, I'm non a happy camper. My models gave useful purchase signals inward stocks slow inward March as well as sell signals inward the commencement few days of April. They besides were premature inward giving purchase signals the terminal few days as well as were completely leaning the incorrect way yesterday. Intellectually I know that the best of predictive models inward markets exclusively cut down uncertainty, simply when I acquire imitation signals, I become dorsum to function as well as run across what I tin sack larn from them. It is non fun to acquire something incorrect when you've position days as well as weeks of long endeavour into crafting something. But I know that's the exclusively way the arts and crafts volition acquire better.
(Note to self: you lot acquire dissimilar results when you lot model realized vs. implied marketplace volatilities).
"If it ain't broke, don't create it," is the incorrect approach. In fixing breaks, nosotros build our selves. And that ensures nosotros do goodness from the stress of operating inward uncertain, risky environments.
Further Reading: The Well-Being Hypothesis
