Can stress be useful in Forex Trading?
Forex trading in turn will “force” you to face potential risks every day .Because of the uncertainty that exists, you often have to anticipate events that could very well make you feel stressed. Psychologically, being stricken with stress is a normal reaction that occurs during trading. Just as normal as an eagle that preys on a rabbit.
Well , wait a minute … isn’t stress always bad? What good things can be used from stress?
Stress, to some degree, can be useful if it can provide a way to make a decision whether to “endure” or “avoid” if you have become more alert and mentally prepared to deal with every possibility. If likened to, such conditions are like when a warrior who gets adrenaline blisters into his brain and then his mind will give orders to his body to react spontaneously to his opponent’s attack. In this case, stress actually serves to protect themselves.
But if a trader does not have the ability to react positively to stress, it will actually worsen his performance. Instead of increasing alertness and reacting to a situation, he will sink into fear and become nervous or even stunned. In such situations he will not be able to make good decisions because he loses his ability to remain calm and focused.
Imagine if when you were crossing the road then suddenly there was a car – or even bigger: a truck – drove towards you at high speed. How do you think you will react?
Normally, when that happens you will be at a fairly high level of stress. If you have the ability to “react positively” to the stress that appears at that time, you will run to save yourself. If not, you will only be stuck in the middle of the road and what will happen next.
In the end, your ability and quality of reaction will distinguish the results you will receive. In critical situations, your ability to deal with stress is what determines whether you will survive or die.
OK, then how can it be applied in trading?
The first step is to realize that risk is an integral part of forex trading. The loss suffered from a transaction, or even several transactions, is not the end of the world. Of course if you trade with risk management that is correct and appropriate. Once you are aware of this fact, you will be able to focus on the things you can do.
The second step is to realize that there is indeed potential you will be under pressure. You must be able to learn how to act calmly, focus and rationally in such situations. You must practice to recognize “potential hazards” then avoid the situation as you save yourself from a truck that is about to hit you.
Accepting defeat is also one way to build a positive response. You will be able to be positive if and only if you practice seriously for it. By practicing (you can use a demo account and evaluate your response to stress), a negative reaction by itself will decrease and you can even sharpen your intuition to avoid “trap holes” in trading, which can arise due to market uncertainty.
The easiest way to reach the “relax” stage in forex trading is, of course, to have strong capital, which is supported by a mature trading plan.
If you can practice correctly on a demo account, then when faced with a real situation you will no longer be nervous, then fixated, which can cause your capital to collapse.
Happy practice controlling stress.