In trading psychology, mental toughness is all about doing what needs to be done in order to trade well. It is taking the actions necessary to keep yourself in the trading game. When a trader makes a mistake or suffers a loss, it can often mark the beginning of a downward spiral. Things can quickly go from bad to worse. Feeling pressure, more mistakes are made, and perhaps more losses are suffered.
Most of us understand how we can build physical strength, but there’s a lot more confusion over the steps to take to develop mental strength.
Assert your authority and beat back your doubts!
Talk to yourself like a trusted friend.
Scientists estimates humans have about 70,000 thoughts per day. That means you have 70,000 opportunities either to make yourself stronger, or to tear yourself down.
Your thoughts greatly influence how you feel and behave. In fact, your inner monologue has a tendency to become a self-fulfilling prophecy. Thinking things like, “I will never close this trade on profit” can alter your behavior in a way that makes those predictions come true.
Practice replacing overly negative thoughts with more realistic ones. When you notice yourself thinking something like, “I’m a loser and I’ll never amount to anything,” remind yourself that your thoughts aren’t necessarily true. Ask yourself, “What would I say to a friend who said this about himself or herself?” And then, offer those kind and gentle words to yourself.
Take charge of your emotions.
Allowing your emotions to control your life will deplete your mental strength. While there’s nothing wrong with being in a bad mood sometimes, staying stuck in a negative rut can be a slippery slope: Sadness can lead to self-pity, anger can turn to bitterness, and mild anxiety can become paralyzing fear.
A lot of problems stem from our desire to avoid discomfort. For example, treaders who fear failure often avoid new challenges in an effort to keep anxiety at bay. Avoiding emotional discomfort, however, is usually a short-term solution that leads to long-term problems. Negative emotions such as feeling down and perhaps even anxiety and fear are also a normal response. Emotions tend to take center stage and the natural desire is escape the negative feelings and unpleasant physical sensations. Again, the center of attention is inside, not on the market.
This focus on downbeat internal experiences takes the trader out of the trading game. To trade well, focus needs to be external, concentrating on the market and finding the next choice trade. No one can trade well when their attention is on what their mind is saying and how they feel.
Develop an awareness of how your emotions impact your life. Decide that you’re going to be in control of your emotions so they don’t control you. Face uncomfortable feelings head-on and take charge of your life. The more you practice tolerating discomfort, the more confidence you’ll gain in your ability to accept new challenges.
Make productive choices.
It’s impossible to feel mentally strong when you’re engaging in self-destructive behaviors that sabotage your best efforts. Yet, most people have a few unproductive habits that they indulge in on a regular basis.
Many of these bad habits seem minor—complaining about your boss, hosting your own pity party, or trying to please everyone—but they can wreak havoc on your mental state. When you indulge in these bad habits, right alongside your good ones, your efforts become counterproductive.
You only have a finite amount of time and energy in life. Devoting your resources to the things mentally strong people don’t do will tire you out and slow your progress toward your goals.
Be aware of what is going on in your mind, body and feelings. Slipping into an internal focus seems automatic because we aren’t fully aware of it as it is happening. Being aware of what the mind is saying and how we are feeling is the first important step in mental toughness. You can catch yourself before things spiral out of control.
How Mental Chatter, Stress And Emotions Take You Out Of The Trading Game
When a trader makes a mistake or suffers a loss, the naturally tendency is to go inside and begin to focus on what the mind is saying, on our bodily sensations, and how we feel. This is nearly automatic.
After a loss, for example, you might hear your mind say something like, “Another loss! It’s the same old thing. I’m never going to be successful in trading. I’m a loser.” Pretty depressing, isn’t it? How can a trader trade well when they buy into such thoughts?
Believing such mental chatter will take you right out of the trading.