Saturday, September 06, 2014

When Trading Problems Are More Than Just Trading Problems

I recently wrote about how 90% of the mental game is a function of how we trade.  Our trading practices impact us emotionally, just as our emotions impact our decision-making.

Sometimes, however, there are realities we cannot avoid if we are to succeed in financial markets.  If we are going through emotional problems, such as depression, anxiety, and relationship conflicts, these can very much interfere with our concentration and our ability to weather the normal ups and downs of markets.

Addictive patterns also very much can create havoc in trading performance.  Sometimes we trade out of need and impulse, not from opportunity.

How do we know when emotional disruption of decision-making might be due to larger psychological issues?  Two factors are relevant:

*  DURATION - If problems have been occurring for an extended time, and especially if you have encountered them at different points in your life, the odds are good that they are not merely situational.  If you have experienced your problems prior to your involvement with trading, it's worth considering that the problems are not merely trading-related ones.

*  SEVERITY - The severity of a problem is the degree to which it interferes with many facets of life.  If a problem disrupts sleeping and eating, affects mood, and lowers overall productivity and social functioning, that's a good sign that it will pervade trading as well.  

Notice that a problem can be of relatively recent duration--such as a relationship breakup--and still have severe impacts.  Also, a problem may not be severe--we function adequately despite it--but it can still be of long duration and keep us from performing at our best. 

When emotional difficulties interfere with trading, the best course of action is to greatly (or totally) reduce risk-taking and devote attention to resolving the problems.  Blowing up a portfolio can only add to stress; if stress is interfering with trading, it makes sense to focus on the stress before the trading adds to it.

In situations where relationship problems, addictive patterns, depression, and anxiety/stress occur outside as well as inside of trading, seeking the help of a qualified professional is often a good step.  It is not necessary to pursue a trading coach for problems that predate trading and occur outside of trading--and, indeed, many coaches lack experience and expertise in these areas.  

If you find yourself more focused on your problems than on markets, the best trade you can make is to invest in your emotional well-being by getting the right kind of help.

Further Reading:  The Greatest Cause of Trading Problems No One Talks About