22/1 – Dealing with Trading-induced Frustrations


There were several times over the past week at which I felt quite frustrated during my trading sessions.  Feeling frustrations, on average, will work against me rather than working for me.

What causes me to feel frustrated?

Trading Losses, foregone gains due to position management errors, foregone gains because of missing setups.

The frustration is less when the result is just due to bad luck (or randomness) – this is because I know that I am not going to win every single trade in any case (instead I am only aiming for a win rate of 55-60%!).  However, the frustration is more if it is due to me being inconsistent with my intentions – examples of this would include: (i) trading when I shouldn’t (e.g without adequate preparation, or on Monday or Friday), (ii) when I take an invalid or semi-valid setup (iii) when I place my initial stop in places where my experience tells me it’s not a good place (iv) when I adjust my stop in a manner that my experience tells me is not optimal.

Sometimes these things happen because I am not thorough enough i.e. I am not aware that I am making a mistake (I am not competent enough). Other times I know I am making an error – in this case I am being reckless.  Frustration is worse for reckless mistakes.

Therefore, how can I reduce the likelihood of frustration?  Follow the “Frustration Avoidance Rules”

  1. By trading only when I meant to trade.
  2. By choosing only valid setups.
  3. By placing my initial stops in good places.
  4. By adjusting my stop in a sensible manner.

Incidentally, by following these 4 steps, I will also improve my net trading results, because on the whole rule violations tend to result in negative performance in the long run.  In fact, stopping my occasional rule deviations will almost certainly make a significant positive impact on my trading results.

Once I am frustrated, what should I do?

  • Avoid making further mistakes, by following the above 4 steps from that the point in time forward.  (i.e. avoid a downward-spiral effect)
  • Engage in visualization to induce a state of calmness and to visualize how I want to be trading for the rest of the session.
  • Going for a walk
  • Going to the gym.
  • Stop trading for the day

If you fancy reading some other Psychology-posts, there are plenty more blog posts on the site here.  Just click on the Psychology tab item below.



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