Short Posts

What Winning Traders Think and Do Under Pressure And Uncertainty

The market likes to play with our nerves. It will do what it does best: shake the most amounts of monkeys off its branches.

This means that stress and high-pressure situations (as a result of uncertainty) are unfortunately absolutely inevitable.

All too often, traders are ill-prepared for this.

In this short post, I want to share 4 things that winning traders do to help them think and act better when faced with uncertainty and high-pressure situations.

1.     They Have a Winning Trader Ritual

The first thing is to realize that high-pressure situations cause us to do the exact opposite of what we would do if we were going to do things well.

What this means is that when the market does something that we absolutely didn’t expect, the instinct is to feel bad and shut down rational thinking.

Your heart races, your breathing becomes shallow, and your perception of the event is that it’s a dangerous assault on your sense of self-worth.

Winning traders have learned to embrace uncertainty as the name of the game. At all times, they’re prepared for the worst-case scenario.

Before the market opens, they have a ritual (or a set of rituals) that helps them relax and take on a winning trader’s mindset.

These rituals can be:

  • Meditation – helps them cultivate a state of focus, presence, and equanimity
  • Breathing exercises — brings more oxygen to the brain which helps them calm down and think better
  • Goal and success visualization exercises – helps with motivation and seeing the bigger picture
  • Positive affirmations – helps manufacture a feeling of confidence and ease
  • Negative visualization – done the right way, this helps them prepare mentally for worst-case scenarios
  • Listening to some calm and soothing music – helps distract them from their anxieties

Having such rituals is not only the stuff of winning traders. In fact, high-level performers (pro athletes, business people, professional musicians…) have sets of rituals that they do before performing.

These help them take control and change their state of mind from a closed-off, uncomfortable, nervous state to a confident and powerful one.

You don’t have to perform all the exercises above. Just do whatever you can and see how this helps you approach the trading day with more calm, more ease, and more confidence.

2.     They Don’t Think of Uncertainty and High-Pressure Situations as Threats

Most traders see uncertainty and the pressure situations it engenders as threatening.

In turn, this undermines their self-confidence; impairs their judgment; elicits fear of failure, saps their energy level and motivation, and spurs impulsive behavior.

But, winning traders have learned to see those situations not as threatening but as simply fun challenges and an opportunity for growth.

So, try shifting your thoughts: Instead of seeing a danger or a threat situation, see a challenge.

We all have this incredible (warrior-like) desire to overcome challenges and prevail. Hence, when you start to look at difficult situations as challenges that you CAN overcome, you are stimulated to give the energy and attention needed to make your best effort.

So, make that “challenge thinking” part of your approach to trading (and life in general). This little cognitive reframing will make all the difference in the world.

3.     They Over-Prepare

Winning traders perform well in high-pressure situations because oftentimes they know exactly what they’re going to do.

They have a plan, and they’ve taken the time to understand why that plan works, and why following it is the best course of action for them.

So, when faced with uncertainty, there’s no need to come up with any decision in the heat of the moment. Everything has already been figured out in advance.  At all times, winning traders know what to do, and they just do what they know.

Your proven plan is your best line of defense against market uncertainty, so make sure you have one, and make sure you’re following it.

4.     They Focus On Trading Well

We all have goals and want to make XXX amount of money in trading this day, week, or month.

But the thing is, you don’t get to decide that. The market does!

Your process and behavior are things you CAN control.

[Your process is what helps you get as close to your goal as possible.]

But the market and trade outcomes are things you CANNOT control.

If you are fixated on a certain monetary goal, you will obsess over every single price move; you will want to check your positions every minute of the day; you will tend to take every outcome personally; you will attempt things outside of your process just to hit your monetary goal.

This is not a way to approach trading because it gives you random results.

You don’t want random results, do you? So, you need a process, you need to stick with it, and you need to focus on trading well.

That means developing tunnel vision when it comes to that specific task.

That’s what winning traders do. For most of them, money isn’t even the real prize. They like to play the game.

They play not for the sake of money, but to win!

So, they keep their eyes on their process (and only their process) because they know this is the concrete step necessary to excel in this field.

Last Few Words…

The market provides an endless supply of uncertainty and difficult situations.

Despite that uncertainty, you must arrive at a place where you can consistently make good decisions and actions.

Hence, handling the pressure that we all feel as a result of uncertainty is a skill and a critical one that you must learn.

These 4 steps I’ve shared above will help you develop that skill.

They’ll help put you in the right mindset and judge decisions not only on the results but on how they were made.

When you’ve come to this point, you’ve adopted the mindset of a winning trader. Good things are on the horizon.

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Yvan
I've been trading for a living since 2006. By merging mindfulness (an in-depth study of the mind and its tendencies in the present moment), a good trading process, and an efficient business practice, I went from being a losing trader to a consistently profitable one. Through my work here at Trading Composure, I aim at helping you do the same.
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