This is another great article that belongs to a trading psychology series. This one was recently sent to us by one of our traders, and we love the content and the structure on how to identify and face your worries when you are in a trade. We hope this will be an eye-opener for you, especially if you struggle to deal with emotions. Enjoy reading.
Everyone worries. And at times, many of us (about 1/3 according to research) worry at an anxiety level and this qualifies as a disorder.
If you feel diagnosed after reading that, join the club. The anxiety is one of the most common mental health disorder in the world.
Before we get into it, let's make sure we don't confuse anxiety with fear. When you are threatened with a baseball bat, you should feel fear.
Anxiety is about anticipating something that may happen. The good old 'what if'. We all know that most of our what if's never occur and we laugh at our silly fears in hindsight. It may seem harmless, but all these anxiety feelings distract you from thinking clearly because your mind is busy trying to solve problems without solving anything.
You are not focused on life, and to pull this into trading, you are not focused on your trade if you keep on thinking 'what if price blasts against me right now?'.
In life, you'll be missing out on fun moments and memorable things and in trading, you are missing out on the real analysis.
Below is not an overnight fix, but rather something that needs to be incorporated into your consciousness and trained like a muscle.
**Rolling up sleeves**
Three keywords: Accepting, Attention and Labelling.
It doesn't help to push away worries.
It would be an easy fix if that was possible. So their presence needs to be accepted, but don't accept the worry-scenarios as inevitable.
Just accept that worries will be present in trading. Accepting is not surrendering or enjoying them. It means to stop running away from them.
As with anything, if we want to make a change, we need to accept the problem first.
So what about attention? Where is your attention when you are worrying? In fact, it's not on your trade (even when you think it is).
And if you think that your attention span is just very short, you're wrong. You have a near-infinite attention span… when it comes
considering all the scenarios that probably won't happen.
So focus on the trade setup. The 'what if' isn't real.
As mentioned before, this is not an easy thing to do consistently and it is like a muscle that needs to be trained.
Labelling will also make it easier.
It is a cliche, but it is a true one: You are not your thoughts. And all this worry is nothing more than thoughts.
For instance, when you break a leg, you say "my leg is broken" and you won't say "I am broken".
Similarly, in response to worrying thoughts, you should say, "there are worries" and not "I am worried".
So when you start to think whether that trade will go against you, you label it as a 'worrying thought'. It's not you and you can't identify with it.
These three tools are your defence system against worries. You need to consciously train them every day. So just accept that worries will be there like someone sitting next to you in the cinema. You can't push them away and out of their seat, so just accept that they are there and focus on the movie.
In your trade setup, just accept the worries, don't give them more attention and label them as thoughts. Even when your muscle is fully trained, these worries may still influence you from time to time.
How do you know when worries arise and can they influence you?
Doing the above will already make your life a lot easier, but it's almost impossible to completely ban worries or always deal with them accordingly. This is because dealing with emotions is harder. Worries trigger negative emotions and vice versa, and this creates a vicious circle of worry-doom.
To deal with this, it is important to note how your body reacts to these emotions. Are you cramping up, breathing faster, getting sweaty palms, etc? Bingo, those are signs of physical reactions to emotions.
So we now have a body that is a reaction to something that is made up by the mind inside that body?! No wonder this can so easily influence our trading performance if it's that powerful. If you make a list of these physical reactions that you notice when worries arise, you know when your worries are taking over. Also, write down what you feel like doing at moments like this. Do you feel like watching random YouTube videos, start drinking beers, checking social media, playing video games, running away etc?.
Now, you have two lists of things that could be the signs that you are being taken over by worries.
Face your worries. It would make sense to just walk away from worries and ignore them, but that is not how the mind works and – more importantly – that is not how you can better learn how to deal with worries. The cliche 'Face Your Fears' exists for a reason.
If – by walking away – you don't prove that your worries are wrong and just thoughts, you give them credibility and keep them alive (and lurking in the background, ready to strike when you're not paying attention) and teach yourself that worries really are something to be afraid of.
So what do we do instead?
Notice and identify them. Very often we only realise we were – unnecessarily – worrying in hindsight. We had no idea at the moment because the feeling was so strong and immediately influenced our emotions.
With the list(s) we mentioned earlier, it is possible to identify worries much sooner than in hindsight. So knowing what to look for and identifying it, you can then control or cope with it. The sooner the worries are identified, the sooner we can take action. Take the bull by the horns (or the bear by the neck, if you will). We previously mentioned that just seeing worries as thoughts will already help you once you've identified worries.
What also helps is to – after doing the above – re-focus back to what you were doing originally.
Focus back on that trade setup. You could argue that this is also a form of walking away, but there are some subtle differences. Being focused and engaged (the keyword here) is 'going deep' while distracting is 'going away'. You are not escaping but rather joining the reality of the moment again (the trade!).
The dangerous strength of emotions. Over time, emotions fade and dissolve. When we feel an emotion, it is always like that might last forever – which is why we react to them – but they never do.
When you take care of the emotion you are feeling, you don't want to redirect your attention but you still want to accept and label it. You certainly don't want to identify with the emotion but you do want to feel it. Label it to get distance and investigate it non-judgmentally. Ask yourself, "What is my brain doing? What is my body doing?" The distance is built into the question. You're not anxious but there is anxiety.
So, investigate, accept and label. The feelings will decrease and then dissolve. It's a skill (like a muscle). It takes time.
To sum it all up:
1. Three keywords: Accepting, Attention and Labelling
2. How do you know when worries arise and can influence you?
Be aware when worries/emotions start to affect you physically.
3. Face the worries
Avoiding is bad. You're telling your brain you need to be afraid of this of and thus giving your worries more credibility.
4. Notice and Identify them
Worries can take your emotions (and thus actions) over by surprise. Know the signs and make sure they don't hijack you.
5. Take the bull by the horns
Bring your focus back to what you were actually doing and give it your full attention.
The dangerous strength of emotions
Investigate, accept and label. The worries will dissolve. Train this skill like a muscle.
Fear makes sense when there's someone swinging a baseball bat at you. Anxiety means you are afraid of nothing but your thoughts.
If you keep on avoiding your worries and let them grow stronger, eventually you get afraid of your own mind. And that's a truly terrible place to be because at least you can run away from the baseball swinging person.
So stop focusing on your worries and rather focus on what the charts are telling you (or what is good in your life if you want to take this beyond trading) 🙂