Trading Psychology Panic

Panic attacks, which affect roughly one-third of Americans, and perhaps many more who are simply unaware that they are even suffering from panic attacks, involve a period of intense, often overwhelming and irrational, fear of distress that are usually associated with other fears.

There are several primary symptoms associated with the panic attacks.  For example, those who have experienced them generally state that there is a brief onset of trembling, followed by a shortness of breath.  Some experience more pronounced symptoms ranging from heart palpitations to hyperventilation to choking or smothering.

The general consensus that panic attacks stem from other phobias, or fears, which in turn triggers a panic attack upon exposure to these fears.  If a person suffers from acrophobia, or fear of heights, for instance, upon flying in an airplane, this phobia may be triggered, causing the person to enter a panicked state and, hence, have a panic attack.  During a panic attack, the "flight vs. fight" reaction comes into play and the person experiencing the attack suddenly has an overwhelming desire to leave the situation they are currently in.

AND Who Is More Likely To Suffer From A Panic Attack?

Most of those who are chronic sufferers have jobs that are either very physically or mentally challenging, leading to a great deal of stress.  When stress levels are high, and one does not have the ability to simply pull away from the situation and relax, the body often times goes into overdrive, a condition that, if occurring to often, can lead an individual to overheat, much like a car would do.  In an individual, however, this overheating takes its form in a panic attack.  The heart will being to race, palms will grow sweaty, and a general feeling of gloom will preside, forcing the individual to step back from whatever he or she was doing, take a breather, and relax. 

There are also several personality traits that doctors believe can contribute to a person experiencing a panic attack.  People who are extremely analytical, are obsessive, emotionally sensitive, or need to be in control at all times are also more likely to experience a panic attack.  The primary reason people with these personality traits are more likely to experience a panic attack is because these people are likely to focus all of their attention on a single issue, and when this issue is no longer under their control, they are likely to 'freak out', thereby resulting in a panic attack.  There is an obsessive or compulsive aspect to all of these personality traits, and it is those kinds of qualities that are most prone to trigger a panic attack.

Consider Day Trading In The Context Of Trading Psychology And Trading Panic

It is important to note that panic attacks are not usually indicative of some underlying medical disorder or psychological problem.  Most of the time, normal people, ones who are completely healthy, are those who experience panic attacks. 

When you consider the characteristics of day trading, and all the associated fears and doubts, both for the outcome of the trade itself, as well as the related self-esteem of the trader receiving that outcome - certainly day trading is a stressful undertaking done in a stressful environment - the potential for this to manifest into what becomes a panic reaction is greatly expanded.  Again, this should not be viewed as something inherently wrong with the individual, this is the normal reaction - this can be controlled.

Consider Stress-Panic Escalation In The Context Of Accurate Evaluations

There are a number of ways that your thoughts can become distorted - recognizing and refuting these distorted thoughts are necessary as part of the plan to control the emotion.

Consider the following cognitive distortions that are common to your thinking in general AND then how they show up in your trading in specific.  For instance HOW many times have you lost 3-4 ticks on a russell trade AND said that you got killed?

• All or nothing thinking:  No shades of gray exist so IF your performance is not perfect - you view yourself as a complete failure.

• Overgeneralization:  One single negative event is viewed as an endless pattern of defeat.

• Disqualifying the positive:  You discount all positive experiences.

• Magnification or minimization:  You may exaggerate the importance of an error or someone else's achievements.  You may underrate your own strengths or someone else's weaknesses.

• Should Statements:  You motivate yourself with shoulds-oughts-musts which leads to guilt.  When you direct these statements inwardly you experience exaggerated feelings of anger-frustration-resentment.

• Labeling and mislabeling:  You label yourself inappropriately - I am a loser - I am a stupid idiot.  You are NOT your trading.  When you do this it makes it difficult, if not impossible, for you to continue constructively.

 

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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