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Reduce Anxiety And Stress – Holding Open Trades Confidently
We have a quick question here from Andrea. Asking what they can do to help them reduce their risk for open trades because they constantly check their screen and their smart phone, especially trades that they leave open over night.
So, this is something very very common actually among traders. And the good news is there are a couple of things that you can do to help with that stress.
RECOMMENDED READING: FURTHER HELP TO REDUCE ANXIETY WITH HOLDING OPEN TRADES
The first way is to remove anxiety is by making sure you’re not over leveraged on any particular trade. So making sure that you’re not risking too much of your account on any particular trade. One thing we always advise traders to do is to use no leverage when they trade. So basically, you only trade 1:1 leverage on every trade.
Now for example, that will mean for every thousand dollars in your account you can only trade micro lots. For every ten thousand dollars in you account you can only trade a mini lot. For every one hundred thousand dollars in your account you can trade standard lots.
Now, that removes a lot of the anxiety from open trades that you have. And apart from that you can also beta adjust your positions to make sure that you’re not over exposed on any particular trade as well. For example, if you are day trading and your stop is 300 bumps away and you are trading at 1:1 leverage, that will mean that you are actually risking 3% of your account. Because at 1:1, roughly speaking every 100 bumps is a 1%.
Now, if you’re trading a day trade and you’ve got a stop loss of 300 bumps that might be a little bit too excessive at 3%.
So, you can reduce your lot size and beta adjust that position to minimize the total percentage risk. And that is another possible way of reducing that anxiety.
Another thing that you can do to reduce your anxiety is by making sure that your getting your trades enough room to breathe. So having very tight stop losses used to cause me a lot of unnecessary stress myself. And basically just increasing the stop loss size and anchoring it away from the entry making sure that I give it enough room to breathe.
That got rid of a lot of that stress for me personally and if you put those two things together for example, a bigger stop loss as well as an unleveraged position or a beta adjusted position that really gives you a lot less stress and a lot less to worry about because you know that the instrument has enough room to breathe in order to develop and you also know that even if your stop loss does get hit you are taking a very manageable loss on that particular trade.
It’s not something that keeps you up at night. Another thing that you can also do is making sure that you’re not overexposed on any particular sentiment or currency as well. For example, if you are trading gross sentiment ya know, try not to take multiple trades at full risk that is all dependent on the same sentiment.
So what you can do for example, if you want to diversify your trades you might take multiple trades on pays that are correlated to risk sentiment.
But at the same time, you would reduce your total risk on all of them. So instead of taking five trades at 1% risk each, you might take five trades at 1% risk total. Meaning you split your total risk for that particular sentiment over a couple of trades. So that’s also something you can do.
So, that’s just a couple of tips or techniques that you can use to reduce some of that stress and possibly help you not to be too stressing due to those screens. Any other questions, just let us know.