Trading Panic In The Context Of Day Trading Method

How do you cure panic attacks, which is to say, how do you keep from letting the inherent stress involved with day trading escalate to the point where it becomes atypical and a panic attack becomes the outcome - an outcome that replaces method trading with non-method trading? 

Are any of the following points consistently characteristic of your trading:

• Do you feel prepared when you take a trade OR do you constantly feel that each trade is a 'rush' to get in before you 'miss' the trade?

• How many entries, that really are base setups, do you then miss AND follow that with a non-setup trade chase or 'early' trade in the opposite direction?

• How many trades do you take OR not take based on your opinion or bias with regards to the outcome of the trade - I can't go long because the market has gone too high, I can't go short because I have missed the initial entry AND if I enter now it is going to reverse?

• How many trades do you take OR not take, where the decision is based on a prior trade - either missing a trade OR losing on a trade?

Part of the reason a panic attack can escalate from mild to intense is because the sufferer becomes fixated on what is happening and, consequently, whether real or imaginary, the symptoms seem to get much worse.  Putting oneself in a relaxing environment will help lower an individual's stress levels which can help lessen any potential symptoms that may arise.  Although this may be practical in the typical panic situation, it becomes more difficult in the day trading environment which is continual real time information processing.

When I think about how I initially became able to control the stress involved with day trading, to the extent that I could execute method and progress through learning to trade, trading method selectivity and increasing trading preparation time were critical.  This became the development of the left side-right side concept of our trading method, it allowed for increase preparation time, additional setup components for selectivity AND with this a diminishing of that 'rushed' real time stress involved with the immediate right side decision.  Over time I have come to add setups that don't have this selectivity, for instance the pivot trades for partial profits and congestion break positioning done sometimes when things are slow-sideways - BUT this was absolutely not the approach at the beginning. 

Is Trading Psychology Stress-Panic Self-Induced?

Psychology - absolutely no. 

We all bring core personality traits into trading, traits which may have never been an issue in other situations BUT now are very problematic for trading.

Trading Psychology - yes. 

I will suggest that the outcome stemming from something that is knowingly done is self-induced:  Why did you take that trade - I don't know.  Was it a base setup - no.

I have always understood trade avoidance as result of the psychology that the trader brings with them to trading, traits for instance that make them risk adverse to the point where they are afraid to trade. 

This is a different situation that will have to be dealt with IF the trader will eventually be able to trade, but I view that as psychology and not trading psychology. 

However, what I don't understand, is when a trader continually trades without having defined the base setups that they are going to trade BUT trades anyway, and of course there results are going to be very inconsistent to the extent of being random, for instance the trader will lose more money on a 'bad' trading day then they are able to make on a 'terrific' trading day.  This is what I regard as trading psychology, and in this context the escalation of stress which turns into panic directed trading decisions is self-induced. 

We have the option of taking a trade or doing nothing, and granted there will always be an amount of mistakes or setup misreads.  BUT to continually AND knowingly trade non-setup trades, is a conscious decision AND from that standpoint is controllable.  Again, do nothing BUT IF you are going to trade, selectively trade defined base setups with the intentions of adding to your setups/trade quantity after you have been able to consistently traded them - this is the process involved with not letting the basic stress involved with trading that can be controlled - turn into panic directed trading with circumvents all your efforts AND can't be controlled.

Step Away From The Panic Or It Will Control Your Next Move - Sometimes You Just Have To Laugh

"Laughter is an instant vacation." - Milton Berle

"Laughter gives us distance.  It allows us to step back from an event, deal with it, and then move on." - Bob Newhart

"With the fearful strain that is on me night and day, if I did not laugh I should die." - Abraham Lincoln

One day instead of my typical screaming and cussing, I found myself laughing at what I had just done, laughing at what was really a 'stupid' trade that shouldn't have been done - this may have been the most important day in my trading career.  I immediately forgot about the trade, and took the next base trade that 'should' be done instead of steaming over the 'stupid' trade.  Whether the trade was a winner wasn't an issue; I controlled stress instead of letting it control me AND by doing so I was able to continue to method trade, instead of beginning to have a session of panic trading.

WHY did this happen - WHY was this so important to me - I am sure it wasn't a conscious event or action? 

I had finally progressed to the point where I was method evaluating my trading, and when I took the non-method trade, I immediately realized it AND as it turned out - I laughed at myself.  As I went forward I became very cognizant about method evaluation in my study AND the more I did this the better my trading became.  I remember the days where I would sit in front of the screen the entire day and only trade 1 setup AND IF it didn't occur THEN I didn't trade.  I remember the hours that I would review charts studying the same pattern OR learning how left side price becomes right side price action.  I remember the 100s of screen prints AND notes of individual occurrences.  AND I clearly remember the very selective trading where 5-8 trades in a day was a lot of trades.

I became a student of method.  I learned selectivity - I developed discipline.  AND I learned that ultimately - it was method that enables the trader to control psychology.  Now, whenever I consider trading, and especially when I work with other traders, I try very hard to extend the concepts of method and method evaluation - taking the attitude that the relevant discussion should be:  is it a base setup AND WHAT are the setup components.

 

Trading Psychology Resources

Trading Mind Software - Studies show that 90% of our mind's power is housed in the subconscious mind and is responsible for our behaviors, habits, and performance.

Trading Stress Management - Trading is a mind game with mental and physical consequences brought on by stress; learning to control your mind is necessary if you are going to come to control the stress.

Mind Method Market - What are your beliefs, and how do they affect your decision process. Overcome your personal characteristics and learn to "hard-wire" proper response to emotionally driven situations.

 

Trading Psychology Books

 

 

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