Becoming frustrated challenges every trader. Trading psychology can help traders handle the many frustrations of trading. Feeling frustrated is just another way of saying that we don’t like what the market is offering us. When things don’t go our way, it’s natural to get frustrated. But like so many things in life, it is how we respond to frustrating events that can make all the difference for a trader.
Let’s look a little closer at how traders can become frustrated, and then look at a few constructive solutions.
How to get Frustrated Trading
Take every loss that occurs and personalize it. Be convinced that the swift market action against your position was done by “them,” on purpose, just to catch your stop or shake you out. Be sure to let your mind run wild with thoughts about how you “always pick bad trades,” and “always lose.” Also, be sure to ask, “why does this always happen to me!”
Make trades outside of your trading plan. When the market starts to move, jump in, even though it’s not a setup in your repertoire. But don’t stop there! Keep trying new trading ideas when the setups in your plan either aren’t triggering or have had 3-4 losses in a row. And, keep trying new indicators. Keep switching from the MACD to stochastics to RSI to CCI to adaptive moving averages and on and on.
Hold onto a bias. Come into the trading day knowing how the market is going to trade. Have the bias, for example, that the market is going to rally. Be sure to keep buying each new low as the market keeps falling, patting yourself on the back for picking each new bottom. Above all else, ignore the market action (and your mounting losses).
OK, these may be a little overstated, but not by much. My point is that our mindset often makes us frustrated. We get into a vicious cycle where we are blaming and condemning, jumping from one thing to the next, or being stubborn in the face of contrary evidence. In the end, we only hurt ourselves.
How to undo the Frustration
Here are some ideas about choices we have in responding to events rather than being frustrated by them:
Reframe obstacles as learning opportunities. Start by accepting responsibility for losses. If you (not “they”) are responsible, you can do something about them. Also, ask better questions. For example, “How can I learn from this experience so that I can improve my trading?” Look at losses as simply events, nothing more. Then, try to learn something new from each event that will benefit your trading in the future.
Work your trading plan. You put a lot of time and careful thought into your trading plan. Honor yourself and the work you did by committing to it and trading from it. Make it a personal goal to stop reacting to random market moves and start responding to the market through the principles and setups in your plan. When the market suddenly moves, refrain from reacting and jumping in. Instead, when the market offers you an opportunity consistent with your plan, you respond to that opportunity by taking the trade.
Anticipate. In your nightly analysis, consider how the market might trade the next day. Also consider the alternatives. You might assess the market as ready to rally. That’s great. Also anticipate the alternatives. What would it look like if the market started to fall? What price levels would be breached that would tell you that? Now you are prepared for however the market might trade.
Undoing frustration is not just “letting go.” It’s an active process. Trading psychology is an important part of that process.