The holiday season is here. It’s time for celebrating and good cheer. It’s also a time of heightened stress. For many traders, who already feel lots of stress, the holidays can feel doubly difficult.
Trading and Holiday Stress
We all know trading stress. Recent losses and drawdowns can bring on stress. So can managing a position, especially if it backs up on you. Even profitable positions can be stressful. We don’t normally think about profitable trades as stressful, but I have seen many traders biting their fingernails and fretting over where and when to close a profitable open position.
Although the holidays are portrayed as an enchanted time when families gather around the Christmas tree or Menorah and exchange gifts, it isn’t all bliss for everyone. Being with families can be stressful. So can finding just the right gifts. And going to all those parties with too much food and drink—it all adds to the stress one feels. If you are a trader who is fighting to come back from a drawdown or are simply working to make December a profitable month, the extra stress of the holidays can be especially daunting.
The added stress often distracts us from making the right trading decisions. For example, a day trader named Ethan wanted extra money for an island vacation as a special Christmas gift to surprise his fiancé. Ethan traded with additional size to make money faster. He also took aggressive trades as he pushed for profits. With additional size and forced trades, losses were greater and made faster than normal. This put him under intense pressure. Notably, Ethan viewed the stress he felt as the cause of his trading problems! “If I wasn’t under such stress,” he explained, “I would have traded better.”
The Most Important Thing to Know About Stress
Here is something important to understand about stress. It isn’t stress itself that causes us harm; it’s our beliefs about it that does the damage.
In a study of 28,000 people, premature death occurred more often in those who believed stress was bad for them. People who had high levels of stress and believed stress was harmful had a 43% increased chance of early death. Remarkably, those who also had high stress but believed that stress was not harmful had the lowest risk of premature death—lower even than people with categorically low levels of stress. We view stress as damaging, but it is our beliefs about stress that actually cause us harm.
In a related study, people were put through a highly stressful performance situation. One-half were instructed beforehand that the increased arousal they would feel is natural, not harmful, and has evolved to help us meet challenges. They were told that uncomfortable stress symptoms (racing heart, rapid breathing, sweatiness, etc.) prepare you for action, help in meeting challenges, and actually support your performance—exactly the opposite of how most view stress. As a result, these participants were less stressed and more confident while performing. More importantly, they had less vascular constriction and greater blood flow. In our typical response to stress, blood vessels constrict causing blood pressure to rise. This is why stress is associated with cardiovascular disease and why chronic stress can be so unhealthy. By reframing stress symptoms as helpful, people not only felt less stress and more confidence, they had a better physiological response while under pressure and a much healthier overall cardiovascular profile.
Seven Tips to Curtail Stress Immediately
As we enter the holiday season, let’s reconsider how we respond to stressful situations, both in daily life and in trading. Here are a few tips:
- Be clear on what’s important to you before making holiday plans. Stress often comes when things that matter conflict with one another. If you need to be well-rested to trade well each day, you might want to skip mid-week parties. Plan the time you spend with friends and family so it won’t conflict with your trading.
- Limit your holiday activities. It’s easy to overdo it. Be conscientious.
- Take time for yourself. Parties, shopping, and visits add up. Don’t sell yourself short. Make time for yourself, too.
- Much holiday stress arises from financial considerations. Make a holiday budget and stick to it. Avoid trading to buy expensive gifts. There are many ways to show someone how much you value them. Be creative.
- Accept the symptoms of stress and arousal as positive, not negative. The stress response helps you meet challenges. Struggling against stress only makes things worse.
- Work in some daily physical activity, especially aerobic exercise. Aerobic exercise is one of the best stress-busters available.
- Perform the Mindful S.T.O.P. several times a day, especially when feeling stressed:
S – Slow down for a few moments by bringing your awareness to your breath and consciously slowing down your breathing with deep breaths.
T – Take note what your mind is saying to you and your feelings.
O – Open up and make room for your thoughts and feelings, especially the stressful ones. Fighting stress creates harm. Do the opposite; be open to your stress.
P – Pursue what matters. Rather than reacting to stress, choose to affirmatively respond in a way that brings you closer to what’s important to you.
#####
Dr. Gary Dayton is a clinical psychologist, trader, and trading educator. His new book Trade Mindfully: Achieve Your Optimum Trading Performance with Mindfulness and Cutting Edge Psychology is recommended by theStreet.com as a “must read.” For more information, please click here.
