We all know that stress is bad. As an investor, it is very important to stay balanced while trading because Monday - Friday you are in the game whether you like it or not. While some stress is welcome (to keep you on your toes) we don't want to find that we are so stressed that we cannot think straight. Trading should be fun and once the learning curve is on the down slope we want to enjoy our daily trading efforts. So how do you fight stress?
The key is to stay calm and be disciplined with your investing. Market induced stress can be caused by you being too involved in your daily routine and the second by second moves versus staying focused on the bigger picture.
How do you fight stress from the stock market? Here are 7 ways:
•Use stop loss orders. Stop loss orders are like insurance, they are stock orders that will automatically sell your position at a predetermined price if that price is hit anytime during the trading day. They remove the "do I sell now? Should I hold instead?" drama of investing and replace it with a disciplined strategy. They are also perfect for maintaining a strong profit vs loss ratio.
•Don't watch your platform live all day every day. The real time ups and downs of the market can really cause some temporary stress. If you are like me you have your platform streaming live quotes from your favorite stocks and the market all day. If you know you aren't in the right mind frame it sometimes is better to just close the platform for a few hours or the day and bring it back on tomorrow.
•Refresh your portfolio balance only once a day. Are your stocks losing ground fast? Instead of refreshing your portfolio every 5 seconds and seeing fresh losses, wait till after the market is closed and then refresh your portfolio balance. Remember, your stop loss orders will minimize your losses for you so you don't have to.
•Have an investment strategy. Not having an investment strategy is like running around with your head cut off, and this tip should probably be the first and most important. Don't be stupid, trade with a plan. Every buy and sell should be part of that plan and as a result will greatly reduce any stress you may have. In fact, a well assembled investment strategy can mean the difference between daily stress and no stress at all.
•Eat healthy foods. Eating healthy can help keep your body well balanced. I personally enjoy an Apple fruit smoothie almost every day while watching the stock market. Eating junk food doesn't help stress because if your body isn't happy your mind typically won't be happy.
•Get enough sleep each night. Adults should sleep on average 6 - 8 hours a night. If you are getting 5 hours or less of sleep and are wondering why you are more sensitive when your stocks open down take a look at your alarm clock. Getting that extra hour or two of sleep will make a big difference in how you react and respond to different situations throughout the trading day. naps during the day don't count!
•Stay calm in intense situations: "stop, think, then act." Perhaps the most effective way to fight stress is to take those stressful times head on with a calm mindset. Remember always to stop, think, then act. This applies with everything from making a tough call with a unknown earnings report coming up to finding your portfolio down several percent on the day.