Stress and Forex Trading :

Stress is usually one of the most common emotional problems that traders encounter. Trading under stress can lead, as you will see below, to significant consequences in terms of profits and losses for investors. As a preamble, it is important to identify the different types of stress, namely the almost inevitable trading stress and external stress that is linked to other sources.

Stress related to trading

Trading stress is the burden of all players in financial markets. For example, fear of losing money can cause stress rises very quickly. Stress can cause a vicious circle in some cases. Indeed, if a trader already encounters difficulties in making investment decisions, stress, linked for example to the fear of losing everything, will make the decision-making even more complicated. Certainly, this will result in losses, sometimes significant.
The only way to manage stress is knowledge and experience. Knowledge - market, traded pair, indicators, types of orders etc ... - gives the trader the opportunity to invest well, while experience gives the trader the confidence to believe in his abilities. When a trader knows he has the opportunity to make money, he also has the confidence to believe in himself, which helps to limit the negative impact of stress on trading.

 External Stress

Stress is sometimes not only related to trading but it can also be the result of other external factors. As trading is a solitary activity, for example, it can happen that stress is linked to sentimental problems. In fact, external stress is the most difficult to manage because it is often the one on which the trader has the fewest catches.

The best advice is, in times of high external stress, to trade only in demonstration mode and to abandon the actual trading. Thus, the trader does not risk losing his money during this period. Once the stressful situation no longer needs to be, it can then return without any problem to the actual trading to realize profits again.

The impact of stress on earnings

Stress affects traders' losses and profits in various ways. Each trader reacts in a specific way to stressful situations. Some, for example, will tend to trade too much in a desperate attempt to make money while others will be unable to make decisions and will therefore trade much less than normal. In all cases, stress has a negative impact on trading. If, suddenly, you realize that you are losing a lot of money, before reviewing your trading strategy, maybe you should ask yourself about your emotional state.