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Hi Frenz, I wanted to write on Mental Health, Fears, and Trading for a long time but kept pushing back to work on my algorithms. This weekend, I felt too overwhelmed with all this coding stuff and trading I’ve been doing over the last few weeks, so I decided to finish that article, as I believe it will help me lay stronger foundations for a longer and healthier career in this field.
Trading or any other gambling activity makes it easy to slip away from reality. Relative large sums of money are involved every single day. It doesn’t matter how much money you have; you can lose it all in one day or, even worse, in minutes.
My most significant loss is $26k in less than a minute. My biggest win is $25k overnight.
I don’t want to discuss Risk Management in this article, as everyone has their own rules, but rather focus on the emotional impact trading has on our lives. I will speak for myself, as I don’t know IRL anyone else who is trading for a living.
Trading is an activity that amplifies every emotion you have in life. I want to go even further and say that it has, to a certain extent, the potential to reveal the worst in you through the seven deadly sins:
Lust
Gluttony
Greed
Sloth
Wrath
Envy
Pride.
With time, things get better. One can learn how to control his emotions. But never perfectly. You can never be fully protected from a complete meltdown. If you choose trading as your sole income stream, you must constantly be at the top of your mental game.
If you’re stuck on a losing streak, had a big argument with your loved one, had crazy recent gains, encountered health issues, or any *thing* that can impact your mood, you can’t trade in these conditions. It’s just too risky. I have done that experience multiple times at my expense.
Over time, I classified these events, which have the potential to severely damaged my trading results, into three categories, that I’ve sorted in ascending difficulties to tackle with:
Purely Trading-Related Events (‘PTRE’)
Outside Events (‘OE’)
Internal Fears (‘IF).
Purely Trading-Related Events
PTRE are reasonably easy to identify: downswings, upswings, entering too late/early in a trade, closing a trade at the wrong time, closing a trade at the good time but then seeing prices going further in your original direction, letting someone else’s opinion interfere with your trading plan, etc.
Whenever I feel I’ve done an action that can be classified in the above list, I take a step back and try to reflect on it. Is it affecting me for my current trading day? Is there a chance that these actions accumulate through the trading day and lead to a complete blow-up? If the answer is yes, I force myself not to trade. I look at future holiday destinations, fun activities, or anything that will put my mind back to a happy place and allow me to return stronger to my trading activities.
Outside Events
OE are more difficult to deal with because you can discover new ones over time. Maybe you were single when you started trading, and it’s not the case anymore. How will you deal with your trading day if you have a massive argument with your partner? You have a stressful time at your job but still want to make it in trading so you can quit. One of your family members just died. You just got a call from the doc who tells you you have cancer. How are you dealing with that? No one teaches you that shit.
Every single outside event that breaks up your inner peace can dramatically affect your trading activities.
Because it’s impossible to know all of these OE in advance, my rule is pretty simple. Whenever I cannot focus only on my trading, I try not to trade. Of course, easier said than done. I still make mistakes, but it’s getting better month after month.
Internal Fears
IF are the toughest ones, you’re battling with yourself. Am I good enough for that shit? My backtests lead to nowhere. Are my ideas all trash? How come some people make a consistent living out of trading, and I can’t? What if I lose all my savings trading? How can I know I’ll still be able to make money from trading six months from now?
You can’t know all of this stuff. You have to let it go. It’s part of the game. Be comfortable being uncomfortable. Once I accepted that it changed a lot of things for me. I once lost all my savings while still at my 9-5, and I remember it was a good day. I told my partner about it, and she acted in pure class and told me not to worry and to stay focused on my dream. From that point, my biggest fear disappeared. My solution to IF is to speak about it. A lot. Make them part of your life. Don’t hide them.
But what about Mental Health?
All the above is a source of amplifying your daily emotions. After a trading day, you can feel like a genius or the dumbest person on earth. If you have no one to talk to, don’t journal, tweet, or do anything to exteriorize your emotions, it will build up, and eventually, your mind won’t be able to handle it at some point in the future. BOOM. Suddenly, *out of nowhere*, it’s too late.
I’m not a doctor, but if I don’t feel happy and at peace with my mind, I know something is not good. I must find it, fight the problem at the roots, and take notes because no one will save you. At the end of your day, you’re sitting behind your screens, making all the decisions.
You’re the captain. You’re the strategist. You’re the whole fucking army! And to survive and thrive, you have to be exceptionally good at all of this at the same time. If one fails, you’ll lose the battle.
This is why I’m a big fan of building a system. And I’m not talking about a trading system but a framework that applies to your life and will help you win those battles.
My AUSJ System
Accept the unknown and the fears
Understand the causes
Speak up about them
Journal
What I find funny is that trading skills play a relatively small part in my success in this activity. It’s more about knowing myself and acknowledging I’m an imperfect individual trying to make the most out of this life. Of course, all the above is useless if you don’t have a trading system with a positive expectancy.
Anyway, I’m glad I took the time to write out my thoughts on this topic, and hopefully, you don’t feel alone anymore in this journey.
Have a great weekend.
Stay safe,
- Retail
Promotion: Looking to trade futures too? You can get funded for less than $100 with Apex. If you want to try the Apex Funded programs, you can use my affiliate link here with my 50% coupon code: RETAILCAPITAL, which will always apply the best available promotion.
Apex is a community of traders founded by Darrell Martin, a rancher and day trader who has built a thriving community of traders into over 30,000 members in over 150 countries since 2008.
Great read, sounds like you've got a great partner.
Thank you! You are NEVER alone! Everyday I learn something more about myself and what I need to work on. Fear is the biggest. Fuck Everything And Run or Face Everything And Recover. 💯 ❤️