Have you ever had a bad day when nothing seemed to go right, a day where it seemed as if every decision you made was wrong? Perhaps you bought at every top and went short at every bottom. Or you panicked and impulsively made a trading error. When things don’t go your way, it is easy to talk yourself into a deeper hole. One little thing builds upon another little thing until, finally, it seems as if you are in a pit of despair that you can’t climb out of. Some traders ride a rollercoaster of emotions, flying high after big wins and falling hard as the losses mount. The optimal way to trade lies between these two extremes, however; one is neither too euphoric nor too desperate, but right in the middle. The winning trader is calm and relaxed, ready to trade effortlessly.


Achieving an optimal mental state is often more easily said than done. By its very nature, trading is stressful. It is often difficult to counteract stress. So how do we achieve a state of relaxation conducive to profitable trading? A few specific steps can be taken to reduce the stress and uncertainty and help you cultivate a calm and winning mindset.  For example, take partial profits on winning trades in order to create a “risk-free” trade. Once a trade makes enough profit to cover the initial stake, sell off part of the position to remove the initial stake you invested. Psychologically, you’ll feel as if you have little to lose.

Ideally, this should be done early in the trade, so that the psychological benefits are available for as long as the remainder of the position is held. Even if you are shooting for big profits on a swing trade, it will work wonders for cultivating a calm and relaxed mental state if you take just a small partial profit early on. At that point, you’ll be playing with the house’s money, with better odds of exiting the trade with a profit, and knowing that the worst-case scenario is breaking even should events turn against you.

There are additional ways to take precautions to minimize emotional ups and downs. Managing risk is vital for your long-term survival, for example. By managing risk, you know that should you encounter the worst-case scenario, you can survive and continue trading. There are many ways to control risk, and thus, control your emotions. One may limit the amount of money that is risked on a single trade to a relatively small percentage of one’s trading account. It is also useful to use a stop loss, either formally or informally.

One may set a formal stop loss with a broker or use the automatic settings of a trading platform. You can also use a mental stop loss to decide beforehand at what point to exit should the market go against the trade. Knowing deep down that potential loss is minimized can do wonders to reduce feelings of anxiety and doubt. Once you know you can survive a potential setback, you can feel free and relaxed knowing that you have a safety net.

Perhaps the most important way you can minimize stress is to outline a detailed trading plan. Humans feel the most intense fear and anxiety when they believe that an adverse event is likely and that they have no idea what to do. We anticipate the impending doom and we wonder how we will cope when it happens. By outlining a detailed trading plan, however, we have specified how we will deal with the potential adverse event. Knowing that we have a clear idea of what to do will provide peace of mind and allow us to feel calm and relaxed.

The winning trader is a calm and relaxed trader. But it isn’t always easy to cultivate such a mindset when one is trading chaotic and unpredictable markets. By taking specific precautions, you can feel a sense of assurance and trade profitably and consistently.

Comments are closed.