Insecurity, long hours affect trading psychology: 10 ways to improve

Emotional and physical drain faced by forex traders affect trading psychology

Forex trading is attractive to individuals for many reasons. Key attractions include the amount of leverage available as well as its 24-hour around the clock operations. Forex traders are able to take advantage of both small price movements during quiet trading hours as well as play news and event driven volatility. A very attractive proposition offered by forex trading is the ability for traders to find a fit with their lifestyle based on 24-hour trading.

What makes forex trading attractive also make it psychologically challenging to manage. They are:

  1. Daily risk of loss and long term financial security is emotionally draining
  2. Long trading hours and what is essentially a solitary activity is physically draining
  3. Both factors above can cloud trading psychology and affect trading performance.

In this post, we will look at these challenges to trading psychology faced by full-time forex traders. Then we will look at how 10 simple steps can provide mental preparation to help traders cope with demands of full-time trading.


Emotional drain #1 – Anxiety driven to trade

Traders might fit into two groups. The first trades forex for a living. Trading is a profession and income comes from trading profits. The second group sees trading as a secondary activity that earns extra income. This group might also aspire to earn money from forex trading. Many reasons exist but motivations could be anxiety-driven such as job insecurity. Anxiety-driven reasons are not the best to build a foundation on.


Emotional drain #2 – Certain demands meet uncertain rewards

Besides initial anxieties, forex traders also encounter daily uncertainty. Every time a trader opens a position in the market, there is risk of loss. Unlike professions that compensate based on output or time spent, trading rewards successful performance only. Although successful traders have achieved high probability outcomes, there is still no certainty. But household expenses demand payment with certainty at the end of the month.


Emotional drain #3 – Long term insecurity

Traders can also disturbed by a lack of long-term security. This would explain why newcomers to trading who have given up a job to plunge directly into full-time forex trading might feel extremely stressed. Although long-time successful traders equally face daily uncertainty compared to new traders, the former might feel more secure because they have an established record of trading performance. New traders on the other hand do not see the light at the end of the tunnel yet.


Physical drain – Long trading hours

There is also one more challenge that full-time traders have to face. This is literally having too much time to trade.

Take away ten hours at work, a two-hour commute to and fro plus other time for daily activities, a person who has a full-time job has a maximum of two maybe three hours for trading each weekday. It also depends on how energetic he or she is.

A full-time trader has all that time to himself. There is only him, the market and no one else. This is solitary activity over long duration is an explosive combination. Make some winning trades and the outcome is elation for the rest of the day. Make some losses, throw in some desperation and plenty of time and leverage, a trader can do a lot of damage to his trading account. A day of huge losses could undo the effort from many days of moderate gains.


Trading psychology that goes down the drain pulls trading performance along

A trader who suffers a setback but can call it a day can still redeem himself the next day. One who carries the emotional baggage over to the next day could do more harm. The worst happens when the mix of emotional, physical drain and bad performance becomes protracted, negative reinforcement.


Outcome: Fail



Look after your trading psychology if you want to run this ‘marathon’

Traders who are mindful of maintaining daily energy and morale create personal rules so that they can create an environment of positive reinforcement. Rules also help to make sure that negative factors do not have the chance to confluence.



10 essential rules to to achieve winning psychology – for novices who want to be full-time traders

#1 Don’t get emotional. Adopt an objective view of wins and losses.

#2 Build a personalised trading plan. Put together some rules. A trading plan is similar to a business plan. Do’s and don’ts are essential but most important are risk management.

#3 Collect statistics for review. Record performance measurements in a diary. Put on the hat of an employer and ask yourself if you would fire or hire the person described in the diary.

#4 Formalize your trading activity. If you find that you cannot resist breaking the rules, try to make the trading activity as formal as possible. Give it a business name and involve your spouse or best friend to manage your business so that you can’t ‘hide’ your losses and destructive activity.

#5 Don’t over trade. Don’t trade late into the night or for long hours. This is because fatigue can cloud judgment. As part of your trading plan, you can establish trading hours and keep to them as a routine. This will give you time to rest and maintain psychological well-being. It will also make your ‘business plan’ formal.

#6 Walk away from bad deals. Trading is after all really a business so the trader has to look at reward to risk proposition.

#7 Admit mistakes and terminate them. Conviction and determination may pay off in other professions but not trading. That’s because the market is always right so staying a bad trade doggedly is a bad idea.

#8 Recite trading rules frequently. Remind yourself of the rules before the start of daily ‘business’ to recall do’s and don’ts. This is useful for stubborn people.

#9 Find a part-time income. It might make you feel more secure by meeting some daily needs. If nothing else, it keeps one from over-trading. Security also comes from the knowledge that daily needs are met while depleted trading capital can be replaced.

#10 Set expectations right. Set realistic targets. Targets that are over-demanding compel the trader to over-trade or jump into bad deals.


Full-time forex trading is a craftsmanship that develops over time

There is really no easy path to take to master full-time trading. Strategies can be acquired but personal psychology is another matter. Some traders are already equipped with the traits that give them an advantage. For others, many transformations are required before diligence, patience and risk tolerance can be cultivated.

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2 thoughts on “Insecurity, long hours affect trading psychology: 10 ways to improve”

  1. Shao Guoyong says:

    Good articles are worth revisiting
    from time to time.

    1. Soh Tiong Hum says:

      Please kindly give feedback or suggestions.

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