Psychology in trading: how to manage stress and emotions?


Trading, like any other job, can be stressful and cause emotional reactions. However, in trading, emotions can have a direct impact on financial results, so emotions and stress management in this area are especially important.

In this article, we’ve put together some tips to help you accept uncertainty, manage your stress and emotions, and keep patience in trading.

Tips for managing your emotions

1. Prepare beforehand.
Planning and having a good trading strategy to follow as well as documenting your goals and limitations is essential. A well-prepared trader will be more confident in his actions and will be able to manage his emotions in the market in a more effective way. In the Level 2 lessons, we go over different trading strategies and also the principles of creating a trading plan. This can help you prepare for trading.


2. Don’t act under the influence of emotions!
Trading psychology states that trading under the influence of emotions can lead to bad decisions and losses. Try to stay cool and analyze the situation rationally, especially if you feel very anxious or fearful.

3. Manage your own expectations. Set realistic goals and don’t set impossible goals. Don’t expect every trade to be profitable, and don’t let past failures influence your future decisions.

4. Use relaxation techniques.
Use emotion management techniques such as mindfulness exercises, positive self-talk, meditation, or yoga to reduce stress levels and calm your mind.

5. Control your physical condition.
It is important to take care of your physical well-being, including sleep, nutrition, and physical activity. A healthy body will help keep a healthy mind.

6. Use a trading diary.
Note down your trades and analyze your decisions. This will help you better understand your trading style and find new ways to improve your skills as well as learning from mistakes. Resonance offers a tool like trader’s notes. You can read more about how to use them in the second level lesson 7.

7. Communicate with other traders.
Find out how they manage their emotions and stress, and implement that knowledge into your own trading.

One important thing to understand is that managing your emotions is a long-term process that requires constant working on yourself. If you pump up your mental resilience, it will help you become a more successful trader in the long run.

How to prevent getting burned out in trading

As we mentioned above, trading is associated with high levels of stress and decision-making under pressure. Traders with fragile emotional intelligence can experience a burnout effect.

Burnout is a physical, psychological, and emotional condition that occurs when you feel exhausted, depleted, and have lost interest in your work.

Here are some tips to help prevent burnout in trading.

  • Breaks from work will help you relax, look at the situation from an aside, clear your head, make adjustments, and analyze the results.
  • Physical activity will help you reboot and return to work with renewed energy and concentration.
  • Not to forget about life outside of trading – romantic relationships, friendships, personal interests, traveling – all of these potentially give energy and add value to your life.

It is important to understand that burnout is a serious condition that can lead to mental and physical problems. Take care of your health and find a balance between work and rest.


Books about psychology in trading

Here are some books that may be useful for learning psychology in trading:

  1. “Trading in the Zone” by Mark Douglas – about the influence of psychology on the trading process and how to learn to control your emotions and make informed decisions.
  2. “Trading Psychology: Tools and Techniques for Understanding Markets” by Brett N. Steenbarger – practical tools for managing emotions and increasing efficiency."
  3. “The Disciplined Trader: Developing a Winning Attitude” by Mark Douglas – A description of the principles of trading psychology, including risk management, decision-making, and the mindset of success.
  4. “Mind Over Markets: Power Trading with Market-Generated Information” by James F. Dalton, Eric T. Jones, and Robert B. Dalton – description of the trading approach based on psychological factors that influence the market.


Psychology plays an important role in trading. Despite the fact that trading at first glance may seem to be a purely rational and mathematical discipline, psychological factors such as emotions, overcoming fear and greed, etc. can greatly affect the decision-making process and, consequently, trading results.

The psychological aspects of trading are not just limited to managing emotions and stress, but also include understanding how to set your trading mindset for success, how to develop self-discipline, manage risk, and develop psychological readiness for trading.

In order to become a successful trader, apart from knowledge about the market and study cluster analysis, it is important to develop psychological skills and abilities. All of these will help to stay calm and remain confident in making decisions in conditions of high uncertainty and market instability.


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