Few careers are as stressful as day trading. When you’re a day trader, you’re living on the edge almost all of the time. Experienced day traders make split-second decisions and know better than to leave their computer when they have an open position. Day traders can make incredible amounts of money one month and then lose it all the next. All of this makes life very stressful.
It’s easy to burn out as a day trader. It’s an emotionally exhausting job, and the market won’t slow down just because you’re having a bad day. It takes a special kind of person to be a day trader and not lose your mind — in fact, more than a few people in finance think all day traders are a little wacky.
The thing is, though, that being a good day trader means not losing your cool. You have to be kind of zen to keep making rational and careful decisions even as the psychology of investing takes hold and tempts you to chase trends or double down bad bets. To be a great day trader, you need to care for your mental health. Here’s how to do that.
Set yourself up for success
Some of the most important things that you can do for your mental health as a day trader are things that you do before you even begin trading. Even the calmest among us would be stressed and freaking out if our whole livelihood was hanging on one trade, which is why day traders who don’t want to live in fear are careful to set up their financial safety nets before they get started.
Stash your retirement fund in safe, slow-growth investments and build out a robust emergency fund to help you get through rough weeks and months on the market. You’ll also need to have enough startup capital to make your day trading worthwhile, of course — but if you can’t afford all of this, then you may not be in a position to day trade safely.
Know when to take time off
Day traders tend to focus on fast-moving parts of the market that mean that they can’t safely walk away from their computer while they have an open position. But you do need breaks, so set your strategy up such that you can take a day off once in a while — or a whole week for a vacation, if you can. Get out of your positions for a while and head to the beach!
And when you’re taking a break, do not check the market. Do not think about the opportunities you might be missing. Instead, consider this: Taking time off makes us more productive and more effective at what we do. Invest in yourself, and you’ll make bigger profits when you come back from your vacation.
Lean on your strategy
Have a great forex trading strategy? Great — then use it, and use it all the time. Don’t find an exciting opportunity that violates the strategy you usually use and decide to change gears “just this once.” If you’re not applying the same strategy consistently, then you could miss out on the big patterns that make strategies work over the long term. If you’re not always pushing in the same direction, you’re not going to get anywhere!
And leaning on your strategy can take some of the stress off of you. If you’re following the rules that you set for yourself, then the moment-to-moment decisions that you make will be, in a sense, out of your hands. Establish the rules that you’re going to stick to before the day starts, and stick to them all day. Ideally, use the same rules every single day. Be consistent, and you’ll go easier on your mental health while also reaping bigger profits.