Interbrand Have you ever felt trading pressure and stress? I have and it’s exhausting. I find that it takes a lot of energy just to manage, let alone to ignore to get on with our job.
When you’re an investor and trader like me, feeling stressed or under pressure as your trades fail to profit does make it even harder to focus. Decision making and clarity of thought are the victims and the consequences can become even more overwhelming.
What is worse is that it doesn’t take much to get to this state, especially when starting out in this investment and trading game. Just one drawdown can bring on the sense of panic that the trade is going wrong or the feeling of failure, so the cycle repeats.
You just have to look at events like the recent US presidential election where the result was not what most had expected and this lead to unexpected stress as most traders and investors around the world feared the worse when they saw the futures market plummet within hours of the result.
However, on the flip side, a few winning investments, a bit of profit and you become relaxed, energized and more focused. Just being relaxed helps the process of identifying the next opportunity, leading to much better investment decisions so the profits begin slowly to mount up. This is known as profit momentum.
So when we are ahead, we gain a sense of empowerment and this in itself leads to greater success. When we have a loss or feel out of control as it all goes the other way, we feel defeated or stuck and unable to move forward.
So the obvious solution is to work out how to get the mental edge that being ahead brings and use it to get out of the rut to turn things around even when it all feels like it’s going wrong. This requires mental momentum.
Mental momentum is the positive surge we get when we believe that we have done all we can. It is not all about winning or making a big profit and therefore it is ideal to harness and use in your trader toolbox as a skill for self-management.
After all it is all too easy to forget to reward ourselves for those things we get right when they are small or appear minor, especially if one just focuses on profit as being the only reward.
But there are a whole host of elements that go into trading that are just as essential in the long run and should be identified and rewarded to help gain that mental momentum. A clear example is learning strategies and trading mechanisms.
So how does this work?
Let’s consider goals that we have or items that we need in order to progress our career as a investor and trader. We can all put together a monthly target of profit desired or required but we need to go behind that and look at the elements that help us towards that profit.
Next we need to break down the tasks and put into different areas such as studying for so many hours per week, or learning a new trading technique or analytical tool.
Even with a profit goal, the sensible thing is to not think in such high numbers such as twenty or thirty percent a year, as that in itself can be overwhelming, especially if the first few of our investments or trades fail to deliver.
Break it down into smaller elements and reward ourselves when they are achieved. This can and should include our daily processes. This way we gain the mental momentum that helps lead to the profit momentum desired.
This is how we set ourselves up that determines if the energy we expend is going to be positively or negatively spent. It takes just as much energy, if not more, to be on the negative side of things, so the sensible investor will look to learn how to gain positive mental momentum.
This is what separates any novice investor into a winning one.