Take Time to Relax From Trading

Submitted by Marco Palmero on 28 June, 2008 - 12:36

No one can go on trading at top speed all the time! Sometimes, you need to change gear and slightly push on the brake. Similarly, you cannot stare at the quote screen and focusing heavily on your trading all day. Take a breather and learn to relax. Learn to take time to relax from trading. You can learn to practice some yoga exercises that would prove to be beneficial to you. These would also help you to focus on your trading practices throughout the day. One of the most efficient techniques is take a long, deep breathe and hold it for 10 seconds. Then exhale very slowly while saying to yourself: "I am calm and relaxed". Take few breaths through your nose and tell yourself to relax.

Plan Your Trading
It is important to enter the market with some plan else you would be trading on your gut instincts. This would give rise to negative emotions as you would not have an idea as to how much money would be made or lost in today’s trading.

Manage Your Trade and Money
Money is not as important to make profits as a well-laid out plan. Small investors can also book more profits and investors with large bank accounts can also book heavy losses. It is more important to trade with money that is dispensable. This way you would not accept small profits to build up and account. You need to manage your trade and money beforehand.

Immediate Indulgence
Don’t think of giving up your day job just because you found trading to be an interesting option. It is important to test waters for sometime before you actually take up trading as a full time activity.

Learn Stop Mechanisms
Learn to adopt stop mechanisms such as a stop close-only, a hard stop, a timing stop, or a dollar amount at the right time. Do not gamble all your money. You need to understand when to book your losses and quit the market.

Learn Virtues of Trading
It is important to trade successfully than continuously. Learn to be patient and trade in a disciplined manner. Do not trade just because you are getting bored. It is yet another sign of bad trading. Learn to be patient to avoid losses.

Trade on Signals
Everyone wants to buy cheap and sell higher. Adopt a rule base approach to pick up signals from the market. Do not trade on the basis of your gut feeling. Pickup the tops and bottoms and trade intelligently in the market.

True Diversification
Most of the traders often take too many positions and over expose themselves. They are unclear about the diversified portfolio and how to manage the same. Learn to manage your overall account. If the trade is not acceptable, then eliminate the same by either sizing it down or cutting it off totally.

Assess Your Trading Environment
Emotional responses provoke poor trade. Make your trading environment conducive to trading and evoke positive feelings. If you are in the middle of loud noises, poor lighting, listening financial stations or anything that distracts you from your thoughts and actions, it is important to eliminate or downsize them.

You should realise that once you are in the market, you can control only your actions and thoughts, not the market itself. Stay cool, calm and composed all the times. This may seem impossible when sitting in the market frenzy but practice would make you perfect. You need to be the master of your emotions to curb your losses and maximise your profits.