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Traders tend to put ourselves in pressure situations more often than we would like to admit. This has been going on for so long that for most of us, we feel there is no way to eliminate these situations, but there are many ways we can successfully react to the pressure. A potential pressure situation is one in which the consequences of your actions are significant to you, like when you place a trade and all you are thinking about is, "How much money am I going to win or lose?" Trading like this will cause you to start trading with emotions and not follow your trading plan. Perhaps you are trading beyond your capabilities or risking more money than you can afford. Another rule that is broken very often is traders who trade with money that is used to pay bills. When you trade the markets with the mortgage or grocery money, you are going to be trading with scared money and we all know that scared money never wins. Keep in mind when the losses due to failure are considerable, the potential for pressure becomes greater. Always use stops and manage your risk on each trade so as not to let your account take a large hit on any one trade. By having a maximum dollar loss per trading session, you can also eliminate some of this pressure.
Actual pressure is created when you begin to think of the consequences (losing or winning money) of your actions instead of concentrating on your actions themselves, such as following your plan and when you have a setup, you take the trade without any apprehension. When winning or losing is on your mind and you are thinking of these possible outcomes, then you try to override your subconscious mind with your conscious mind. Your subconscious mind houses your trading plan so there is no thinking involved when you see your setup; you just instinctively do the right thing. This is why trading on demo account different from real trading. There are no real penalties whe you trade on a Forex demo account. In real time trading, you can have both penalties and rewards. Simulator trading is a great way to get started in trading, but keep in mind that you are only learning the mechanics of trading while on the simulator and not the emotional side as much. When you fear failure, your conscious mind does not trust the subconscious mind and will try and help as much as it can. This can be where ego comes in to play. You start hearing voices in your head about taking your profits early or letting that loss run - it will come back, etc. You will start to concentrate harder and then the tension will inevitably start to creep in. One of the winning traits in trading is relaxation as you trade. When you are concentrating so hard you become tense, relaxation is almost impossible. Here is the trader's definition of pressure: "Pressure is the self-induced tension created by thinking about the wins or losses of a trade instead of the trade itself." Tension and pressure are closely related. When we get tense we find ourselves squeezing the mouse very hard, getting sore muscles, and even feeling some emotional instability. Do you ever feel like you need to do something special in your trade execution on particular trades? You should not feel this way at all. By executing your trades the exact same way each time, you will become more confident and less emotional in your execution. Confidence in your abilities, especially in subconscious execution, will allow you to make no change in the way you place your trades even when the markets do not appear to be rational. Your ability to ignore potential pressure situations and to treat each trade in exactly the same manner as you treated your simulator trades (focused on execution and not results), will determine how much pressure you feel and how you react to it. A mantra you may want to remember is "There is nothing special about this trade." This may help you detach yourself from a potential pressure situation. If you will repeat this to yourself while preparing your trade and convince yourself that the statement is true, then you may be able to treat each trade equally. If you want to take one of the steps towards becoming a successful trader, you will have to accept, recognize, face and conquer pressure. And like every other obstacle you have conquered, you can do this, too. I also suggest you to read How to Deal with Fear and Avoid it. |
