Forex trading is inarguably a high-stress environment. Regardless of how experienced or resilient you are as a trader, forex trading will test you and maybe even break and remold you.
You should consider developing healthy coping mechanisms to manage your emotional and mental health as a trader efficiently. These coping mechanisms will help you better manage setbacks, losses, stress, market uncertainties, etc.
Your emotion is essential as a trader, and the ability to effectively control them is a significant addition to your arsenal. But controlling your emotions is never easy, no matter how anyone paints it to be. It requires intentional efforts and time. It doesn’t just happen overnight.
Without further ado, let’s dive right into the best coping mechanism for forex traders that you should consider developing today!
Caveat: I have used – and still use – these coping mechanisms myself and they have been very helpful.
First, What Is Healthy Coping Mechanism for Forex Traders?
As the name suggests, healthy coping mechanisms for forex traders are positive techniques and strategies to handle difficult emotional situations before, during, or after trading. These coping mechanisms also help with stress management and overall help forex traders maintain a healthy work-life balance.
With healthy coping mechanisms, you can become more emotionally stable to trade the forex market, become resilient against harsh market conditions, and handle (and solve) challenging situations without engaging in bad or poor trading habits, such as revenge trading.
Best 6 Coping Mechanisms for Forex Traders
1. Have a Pre-Trading Checklist
In other words, have a checklist that you must complete before you start trading. It may be mental or written down in your trading journal – I will recommend you write it down, anyways.
A pre-trading checklist will help you eliminate possible perfectionistic expectations. And these expectations have proven to cause unnecessary performance pressure, resulting in damning consequences, such as overtrading.
Your checklist should contain your goals for that trading day. Ensure it is reasonable and, more importantly, conforms to your overall mental health bandwidth.
2. Have a Consistent Routine
A consistent trading routine helps provide stability and structure. As I like to mention, trading is a business and should be treated as one. It’s unwise to run a business without structure; routines create this structure for you.
Also, consistent trading routines help reduce stress and anxiety – you already know what you want to do and when you want to do it. Touche!
Ensure you include exercises, breaks, etc., in your routines. This way, you can avoid monotony and enjoy every step of your trading process!
3. Focus on the Process and not the Profits or Loss
Another coping mechanism for forex traders that I cannot overemphasize is to enjoy every step of the trading process. If you only prioritize making money, you may run in unending circles like the rat race. Of course, we are all trading to make more money, but when it becomes the priority, it may be disastrous.
It may create unnecessary pressure on yourself, which isn’t entirely healthy for your mental and emotional well-being. Find a working strategy, enjoy the process associated with trading, and if you do it right, the profits will come. But if you put profits first, you may not even achieve anything.
4. Understand That Setbacks Are Normal
As I mentioned in the introductory part of this article, the forex market is filled with uncertainties. The truth is no one exactly knows what the market will do in the next minute. We are all making calculated predictions. So, whenever the market doesn’t follow your prediction, always accept that it is normal.
Instead of beating yourself hard, identify and work on what might have gone wrong. Beyond the peace of mind associated with this coping mechanism for forex traders, it also gives you a better-prepared mental state to enter other trades.
5. Exercise Regularly
It is no longer news how vital physical activity can be to us as humans. According to the Centers for Disease Control, regularly exercising has an immediate benefit on human brain health. It helps you relieve stress while improving your mood.
From the first coping mechanism for forex traders discussed in this article to the last, one thing is certain: your state of mind as a trader is very important. If unwell, everything else in your trading journey can go south.
I hope you find this article helpful. You can read other articles I’ve recently published on the psychology of traders below: