Updated: Dec 6, 2020
I'm privileged to acquire a Bachelor of Science in Nursing degree and understand the psychology of human emotions. It is something I get to apply in my life and coping strategies. (My fellow traders, this article can help you manage your emotional health as a trader. I hope you'd read until the end.)
Grief and losing is a common ground among humankind. If you're a market trader, especially in stocks or foreign exchange (forex) market, you've probably experienced a combination of joyous, thrilling and painful roller coaster ride of emotions.
Your experience of DABDA (I will talk more about this as we move on) is most likely felt everyday especially if you're a day trader who gets in and out of the market several times during the day.
To protect your emotional health, you must first understand how human emotions could unfold during losing trades. It will help you understand yourself. Self-awareness can help you prepare for what to do next once you feel these emotions sinking in.
Being too emotional during trading is one of the last things you'd want to do. If you're negatively coping with each loss because of poor emotion management, you could lose your money sooner.
Keep in mind that self-awareness is the first step toward behavior change.
What is DABDA?
DABDA is a popular medical acronym for:
It is described by Elisabeth Kubler-Ross as the five stages of grief. Although this is originally related to experiences on death and dying, these emotions are similarly encountered during significant loses.
Thus, we can adapt this Ross' model and understand how these emotions play among losing traders.
It is a common knowledge the majority of traders lose money. It is something new traders often hear or read about and more experienced trader actually endure from time to time.
As you're looking into your computer monitor, you noticed and feel that the market is going against your trade.
Because you risked a lot, you struggle to move your fingers, close the trade and accept your loss. Worse, you even adjusted your stop loss, HOPING the market would turn it's tide on your favor. You're in DENIAL, my friend.
With a blink of an eye, your risked money has just been devoured by the market. Wow! Isn't this something we all faced before? This is a very common scenario for both new and more experienced traders.
As a trader, you must acknowledge when the feeling of DENIAL is taking over your logical thinking. After acknowledging, you must have the strong will to stick with your plan or cut your losses quickly.
This is the first way to stay sane in your trading career.
You have to accept the fact that you can NEVER control the market. All you have to do is to appropriately and logically react to what it does. If your time-tested strategy isn't working at this time, do not force it to work. Stop day dreaming.
Likewise, do not jump on experimenting with another strategy. This habit isn't going to work in the long run.
Now that you have lost your money because of your own negligence, you find yourself swearing, cursing, throwing things, yelling at your own wife and/or children, wrecking your trading computer or phone, and other behaviors that indicate you're mad--really mad.
You could even be unaware that you're ANGRY. This can be devastating to you and your social support. Have you ever noticed that after a losing trade, you sometimes get into trouble with someone particularly those who live with you in the same house?
Don't you think it is totally unfair to divert your anger to others at this point of time? As a trader, you are fully accountable to whatever consequence trading brings to your life.
What good will it bring to you if you'll allow anger to destroy yourself and worse, your relationship with others? Be prepared to handle anger even before you start trading.
During this point, you may try to bargain with someone, such as your life partner (spouse) who is now adamantly telling you to stop from trading. You'd also probably kneel down on your knees and reverently pray to God asking Him to help you succeed in your trading career.
You make promises to your spouse or to God. You try to BARGAIN and make promises to change your bad trading habits if you're given another chance.
You could even try to bargain with your own self, as many traders do.
There also could be times that when you already feel emotionally better you might intentionally or unintentionally forget your promises. That's very common.
What do you think could happen next once you're unable to stick to your trading plan or risk too much then fail?
The answer the my previous question could lead to DEPRESSION. This is when you may start to lose hope and feel strongly discouraged to trade. Perhaps it is during this time when about 95-98% of the traders totally quit trading for good (or temporarily).
This is a crucial point in any trader's life. You may have already lost a significant amount of money as this happens. When depressed, some people may have loss of appetite, decrease in social interaction, have sleepless nights, outbursts of tears and others.
When your negative emotions take control of your life, you could really be in big trouble. As a nurse, I would suggest talking to your healthcare professional to get proper personal medical advice. You might also be referred to a psychologist, depending on your health status.
This is the point when you tell yourself, "Trading is not for me." Then, you let go of trading. You may have struggles controlling your urge to trade because of your past experiences.
It is important that if you decided to seek medical advice for, let's say, trading-turned-into-gambling addiction or depression, you must adhere to doctor's prescribed treatment even if you're not trading anymore.
To help you recover quickly, emotionally and physically, engage yourself in a healthy lifestyle. Go out with good friends and loved ones you have missed spending time with because of trading. Eat nutritious food, get adequate rest and exercise, do some positive self-talk, and many more.
You might also want to read my article about What Triggered My Facial Ticks and How I Overcame Them--Naturally. I've had facial ticks because of stress, and doing those stuff personally helped me to manage it.
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