Are You Worried?
After reading the financial page on Wednesday night, Jim thought, "How could anyone invest in the markets and get a sound night's sleep?" After you saw the major indexes drop on Wednesday, you might have thought the same thing. But as a seasoned investor or trader, you realize that such corrections are commonplace and you've learned to take them in stride. You don't worry about it and know that in the long run, you'll come out ahead. Not everyone is so lucky, however. Some people just can't stop worrying. They look at their portfolio every day, and can't stand to see it lose value, even if it is miniscule and just for a day. They toss and turn all night. Sometimes they even close out positions because they just can't calm down while their money is in play. Unfortunately, some investors worry so much that they just cannot trade efficiently. Other nervous investors just give up. Do you ever get too stressed out while trading? If you are an extreme worrier, perhaps you want to learn to day trade, or just the opposite, learn to trade long term. There are advantages to long-term trading.
Most investors are anxious because they look at the performance of the markets every day and worry about how the natural, transitory ebb and flow of markets may spell doom. By emphasizing the long term nature of trading a worried trader can calm down. Such traders can more easily tell themselves, "Who cares how my positions are doing today? In the long run, over a few weeks or months, I'll come out ahead." That said, some investors are so prone to worry that they cannot relax. They are always thinking of the worst case scenario. In the back of their mind, they truly believe, "I'm going to lose all my money." That's were a stop-loss system can help matters. By using a protective stop set to keep a loss at a reasonable minimum, you'll be able to closely look at the worst-case scenario, realize that the potential loss is minimized, and learn to accept it.
There are other helpful ways to stop worrying. First, you should write down your profit objectives for each trade and keep them nearby. By focusing on your plan, you will be able to stay on target, and when you see how well you are progressing toward you goal, you will feel better. Second, cut back on how often you look at your trades, read the financial section of the newspaper, or watch television coverage of the markets. Looking at how well the markets are doing is merely going to make you worry about how well your trades are doing. If you avoid looking, you'll feel better.
If you are a worrier, trading can be something to fear rather than an activity to enjoy. The more you worry, the higher your potential for losses. By taking precautions, you can stop worrying, relax, and take home the profits.