How Stress Can Impact Your Trading Performance

trading mindset trading psychology Mar 28, 2024

Reading Time: 15 min

Trading is not for the faint of heart. It's all about taking risks, making split-second decisions, and dealing with the unpredictable nature of the markets. The constant threat of losing money and the intense pressure to perform can take a toll on your mental and physical well-being.

It's like battling an invisible force that's constantly pushing you to your limits. Stress becomes a silent enemy that wreaks havoc on you without you even realizing it. 

So recently, I surveyed traders and asked a question: Do you ever trade under the influence?

​The most common response I received was, "Of course not! There is too much at stake, and I need to keep my head clear."

​As genuine as this response may seem, it's not entirely accurate.

The truth is, every trader, even the most successful one is influenced by something every day—stress.  Which can significantly impact your trading results and overall well-being.

In this article, I'll explore how stress affects your trading and share some tips on how to manage it. Remember, you're not alone in this battle against stress, and there are ways to overcome it, feel comfortable, and enjoy trading every day. 

 Let's start with trading stress symptoms. Have you ever experienced any of these?


Trading Stress Symptoms

  • Excessive worry about the market or specific trades
  • Difficulty in making decisions or procrastination
  • Overtrading or, conversely, fear of placing any trade 
  • Emotional volatility, such as sudden mood swings or heightened irritability, directly linked to market performance or trading outcomes.
  • Social withdrawal, where you might isolate to focus excessively just on trading or avoid discussions about your trading activities due to fear of judgment.
  • Compulsive checking of market news, prices, and trading accounts (driven by FOMO, which I comprehensively explained in this article)

And on top of all that stress can manifest physically in your body. So one more quick question for you:  Have you observed any of these symptoms becoming a recurring issue?

Trading Stress Impacts Physical Health

Struggling to concentrate? Dealing with constant headaches and tummy troubles? Yep. Feeling tense and achy all over? Absolutely. Tossing and turning at night? Oh, you bet. Forgetting things left and right? Guilty. And let's not forget about the skyrocketing blood pressure, unwanted weight gain, and overwhelming feelings of anxiety and sadness.

Those are frequent byproducts of trading stress and it wreaks havoc on your body!


How Trading Stress Reshaped My Life

Let me share a very personal story with you...

When I was 3 years old, the doctors discovered that I had a heart defect. So, I ended up having heart surgery and a pretty traumatic stay in a hospital. As my Mom told me I was there for just a week, but in my memory it was at least a month. Even though I was very young, certain images, feelings, and even sounds from that time are still vivid in my memory. That surgery and the following years had an incredible impact on my psyche. I was being bullied by kids at school and during my summer vacations because of the quite extensive scar on my shoulder from the incision.

I used to regularly experience sharp pain in my heart area followed up by shortness of breath and a panic attack. Every time that happened I thought there was something seriously wrong with my heart and I might be dying. It could have been caused by me overhearing a story once that my Mom was telling someone about a girl who died at the age of 16. She had the same kind of operation as I did and when growing up something went wrong as a result of it. That was enough for me as a child to know I was in danger. My panic attacks turned into a routine and they were not taken seriously or addressed in any way. My cardiologist was saying my heart was fine, that I was just stressing out, and that I should stop it. So, I had to somehow deal with it on my own as a child and as a teenager. After I survived my 16th birthday I stopped worrying about my heart and the panic attacks subsided. Regardless of how hard it was for me at that time, this childhood trauma made me a very strong person. It made me a survivor. I’ve learned well how to deal with crises, calm myself down, overcome challenges, and do it all on my own. Not to count on help. Just fighting and coming on top. I’m telling you this childhood story because it has been a key element in my transformation as a trader. 


After being stuck in a failing cycle for 2 years, constantly losing all my profits and fighting the market all the time I started having some serious health issues that had no physiological ground. It was simply the stress that started to have an impact on my health. One Saturday afternoon, my body simply said “Stop that madness”. All of a sudden I started getting a terrible headache and in a matter of minutes I felt very dizzy. I was home alone and after 10 minutes or so, I was sitting on a couch feeling like I was about to faint so I decided to call 911. When the ambulance showed up, it appeared that my sugar dropped to a critical level. The nurse told me I could have died. 

After that incident, I started having similar sensations as I was having as a child. Including the panic attacks. Nearly 30 years later, just like with a touch of a magic wand my childhood trauma showed up. That was for me a serious warning signal and scared the heck out of me. That’s when I decided to take a break from trading. I went to see a psychologist and at some point, she asked me why I just simply don’t give up trading if it gives me so much stress and trouble. She said simply: why don’t you stop? And I will never forget what I said. I answered her: I cannot. What I felt at that moment was a pivotal point in my trading journey. I felt that survivor in me. I couldn’t just quit. But I also knew I couldn’t go on like this either. I left her office and at this point, I knew I had to do something. So, I took a break from the market and I started looking deeper into what was keeping me in that self-destructive cycle. How did I keep myself stuck? Fortunately, I had a strong enough background as a life coach and NLP Master Practitioner that helped me in this process. I discovered that the very same survival mechanism that helped me get through the difficult times as a child, was now showing up in my trading making me act in my best interest. I just kept fighting. Taking a loss was giving up, losing the fight. 


What I also realized was that I was so used to acting out of my survival instinct that subconsciously I was creating situations where I could put my strong survival skills to use. And not only in trading - I was doing it in my private life as well. I was doing it in relationships, jobs, my businesses - never let myself thrive, even when there was an opportunity to do so. I would instead choose the path of the most resistance. So that I could overcome the challenge again and feel good about myself. It made me feel strong, invincible like I achieved something big. But in reality? I was running in circles. 

What was mind-blowing to me was to learn that our body gets addicted to the chemicals that are released in survival mode. So, the body asks for more and that’s how this becomes a vicious cycle. 

This way of living just felt familiar. I knew exactly how to handle a challenge. Fighting and not giving up.  And trading was the domain that initiated the change. It changed the way I live from surviving to thriving. The market is an environment that by default triggers survival mode. It is uncertain, unpredictable, and many times can be pretty hostile. Most traders entering the field are not prepared and they do not realize how stressful the environment they are exposing themselves to. 


How Stress Can Impact Your Trading Performance

Stress impacts how you think, and how you feel and behave. In trading it makes you repeat the same mistakes all over. Stress sabotages you and if you are not aware of how it does it and do not learn how to manage it - you might be stuck in the same sabotaging patterns for years.

Our body is made to react to stress in ways meant to protect us against threats from predators and other aggressors. It activates the survival mode. While such threats are rare today, we have other modern ways to activate this response. 

In trading, you are exposing yourself to a threat situation daily. The risk of losing money, the possibility of being wrong, the risk of failing, not being able to trade because you lose too much, and losing trust. Plus there is the risk that what happened in the past might happen again. Missing the opportunity or losing again. On top of that, the fear of the unknown is causing additional distress and discomfort. 

Is my decision right? Is this trade going to work? Am I going to lose? And so on...

You get stressed as a result of thinking that you are not in control and not being able to predict the outcomes you want. Because of all the exposure, you may feel as if you're always under attack. And you keep activating your natural stress response preparing your body to fight or flight. 

πŸ’‘ Important Note: Remember that all that happens while you’re trying to deliver a good trading performance! 

Trading is not just a cognitive activity: reading charts, analyzing the market, following the news, and concluding. It brings up a lot of emotions and a lot of stress. 


What Damage Can Trading Stress Cause

To see what real damage stress can cause, first, we need to know how that natural stress response works.

When you face a perceived threat, for instance, a possibility of losing on a trade or missing a trade, a tiny region in your brain sets off an alarm system in your body. 
When the survival system is activated, your heart rate and blood pressure increase, your blood flow to the digestive organs reduces and increases to the extremities for action, and you get a surge of hormones such as adrenaline and cortisol. There are changes in the body that enable you to flee or fight, heightening your level of preparedness for physical action. The regeneration and regulation activities of the body such as digestion are put on a temporary hold. And once a perceived threat is over, everything returns to typical levels. And other systems go back to their regular activities.

Now, when you expose yourself to stressors all the time that fight-or-flight reaction stays turned on. The long-term activation of the stress response system and too much exposure to cortisol and other stress hormones can disrupt almost all the body's processes. And the stress doesn’t necessarily have to be a real situation. You can turn the stress response on just by thinking about a past or future stressful situation. Your body will physiologically respond as if you were in a real-life situation. 

From the body's perspective if you live in stress you live in survival. 

And our body is not designed for long-term stress. That’s what does the real damage. Because The body does not get a chance to regenerate. High cortisol level - the stress hormone - breaks down the immune system and we get ill. And healing takes longer because in a state of emergency that’s not the priority of the body. Many times people under stress sleep less because of the level of adrenaline, and the less you sleep the more stressed you are.  The issue with the repeated and long-term stress in trading is that all the mobilization in the body does not get used. We don’t fight or flee. So your heart stays at an accelerated rate resulting in high blood pressure or arrhythmia. This arousal state often makes people feel anxious, shaky, and emotionally reactive. When we are in a stress response our cognitive function gets impaired.

πŸ’‘ Important Note: Most people, under the influence of stress response, don't think clearly because the blood flows away from the cognitive center of the brain. It's simply unconsciously reacting instead of planning their actions.

If you are not getting the results you want and you are stuck repeating the same behavior patterns, it’s most likely because your stress turns a survival response on over and over again. 


Handling Trading Stress

Let me put it this way: You cannot improve your trading results if you are under constant stress. You cannot perform well if you are in a survival state. Because your automatic response will simply take over and make you repeat the old behavior. It will make you fight the market. 

And that’s when it feels like something just takes control over you and you find yourself making trading decisions you cannot explain later on. So, you see that getting out of the failing cycle in trading is really about getting out of your automatic stress response. And unfortunately, it is not going to happen by itself.

You have to do the work!

πŸ’‘ Important Question: There comes a point in your trading journey when you have to ask yourself: What is the price I am willing to pay for staying in the game? How can I continue trading, but don’t let it negatively affect me? 

I have seen so many traders hoping for their struggle to be over one day. However, I have not seen one that managed to get out of the failing cycle without changing their stress responses and learning how to self-regulate. So, by now you might be wondering, ok, but how can I do that? How can you trade without activating your natural stress response?


1. Developing Emotional Intelligence

Developing awareness of your thoughts is the first step toward changing your automatic programming. Because you cannot change what you are not aware of.  

The most effective way to do that is by developing your Emotional Intelligence, which is the ability to recognize, understand, and manage your emotions.

Emotional Intelligence is incredibly important in trading because it not only helps you manage stress but is also key to developing resilience, which is the ability to recover quickly from setbacks and maintain focus on long-term goals.

 A lot of stress and activation of your survival response comes from anticipation of what might happen. You might be thinking about a potential loss, being wrong, or missing a trade.


2. Journaling for Clarity

If you can write down your thoughts
during the trading day you will be able to discover what emotions those thoughts are triggering. 

This kind of journaling will give you valuable insights into how your emotions are affecting your trading. Identifying the thoughts that trigger negative emotions – will allow you to change them if they don’t activate the stress response. You can shift the way you think about what is stressing you out. 

Also, learn how to recognize your emotions. Learn to bring awareness to your body and stay with your attention on the experience of what you sense, when you are in the trade or when you are about to get into one. For one it helps you keep your thoughts in the present moment and takes you out of your head. So you will be less prone to the possible thoughts that might be predicting some potential threats activating the survival response. 

And secondly, your body can sense things faster than your conscious awareness takes notice of them. So, often your body will give you signals that can feed your decisions. 


3. Meditation and Relaxation

I also recommend meditation as a great way to calm your nervous system and learn to bring your attention to where you want it to be.

When we meditate, we practice noticing when our mind has wandered. So you become familiar with the feeling of fixing your attention on an object and keeping it there. It helps you learn how to stay in the role of an observer of your thoughts and your emotions. It helps you become more objective and therefore less emotional towards what is happening in front of you.


4. Seeking Professional Help

And last, but not least! In cases where trading stress severely impacts your life, you should seek help. Your health and overall well-being is at stake here. And no amount of money is worth it!





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