Where do you feature on the stress scale when trading?

I've just happened across a survey from YouGov which shows that 50% of Britons would rather live a low stress and low achievement life than a high stress, high achievement life. 25% would go for the high stress life and 25% didn't know.

Demographics played a big part in the choices. 18-24 year olds voted 52%/23% for the high stress life, while all those over 25 voted for the low stress life. That's probably a natural result as youngsters should be all eager and full of beans to go out and tackle the world.

How can we equate this to trading?

One of my earliest discoveries in my City career and trading was to learn that having big targets and asperations led to increased stress levels. The more you took on the greater the stress became. Competition among traders often lead to greater mistakes as the pressure to win rose. On the LIFFE floor it was completely removed from reality. The sums of money moving about through traders accounts were immense compared to the real world.

I learnt very quickly that each trade didn't have to be a jackpot trade but should instead be judged in real world values. Making something like £500 in an hour or a day was most peoples mortgage payment for a month, so why did I need to try and risk those sorts of amounts to compete with everyone else on the floor? My life was outside the floor not in it. Yes I was young and full of it but did I want the added stress of trying to make millions in my first few months of trading? I decided I didn't and so my whole trading ethos started then. I said to myself that instead of 'Jackpot' trading, slow and steady would suit both my account and my stress levels, and I still trade that way now.

Through learning how to deal with losing by defining risk, I find I can trade with very little emotion and therefore stress. I don't suffer sleepless nights over trades I hold. Yes, I still feel some of the emotions of trading but if I'm prepared for the worst outcome (getting stopped out and losing money), then I am free of one of the main stresses in trading.

So how stressful is trading for you?

It might be wise to ask yourself that question. If you find trading stressful, ask yourself "why?".

Here are a few reasons why traders get stressed when trading. Is this you?

  1. You trade for a living to support you and your family

  2. You're scared about losing money you can't really afford to lose

  3. Your trade sizes are too big

  4. Your targets are too big

  5. You've fallen for the trading get rich quick stories but realise it takes a lot more work than that. You tell yourself you know what you're doing but deep down you realise you don't have a clue

There are many other reasons why stress levels rise and it's up to us to find them and find an answer to them. For many the answer is to simply try lowering your trade size, or amount you're risking in an account.

You also need to find the balance between what you might want to achieve and what you can realistically achieve. Find the balance between what keeps stress levels low and what sends them higher. You need to be honest with yourself as you'll only ever come out the other side if you are.

Let us know what stresses you out and we'll see if we, or any of the readership can offer some advice.

How stressed are you?