3. Embrace The Short Term Discomfort

When you are holding a trade you are in a tricky situation psychologically. If you hold the trade and then it goes against you feel really bad that you didn’t take the money when you could have; if you take the money you then feel really bad if it hits your profit target. This dilemma and the uncertainty of the outcome can lead to quite strong feelings of anxiety and even activate your threat response, amplifying the tendencies you have towards risk aversion and short-term action – getting out of the trade. Holding trades requires you to feel uncomfortable in the presence of challenging thoughts – it requires you to approach difficulty rather than avoid it. Often in trading the behavioural choice we make in the short term acts in opposition to the benefits we can get in the long term. Taking profits earlier reduces the feelings of anxiety now, but may be stopping you from maximising your profits in the longer term.

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Diagram : Running your profits further may require you to move from short-term avoidance and comfort to short-term acceptance and discomfort.

You have to be willing to accept the feelings of uncertainty and anxiety that come with holding a trade.

Firstly, adopt an approach of willingness to accept the discomfort, to embrace it. Every time you experience the discomfort, expose yourself to it, it will become slightly easier the next time. See each period of discomfort as a period of learning how to get better at dealing with discomfort.

Secondly, see anxiety as some ‘data’, and not as something to be avoided. Anxiety is the emotion that tells you that there is uncertainty – which is absolutely correct in this situation.

Thirdly, tune in to your experience, move towards it, rather than try to avoid it. What are you thinking? What emotions are present? What sensations are there in the body? Bringing full awareness to your experience can help to reduce your reactivity to your thoughts and feelings, helping to give you more choice and flexibility in your decision making.

4. Push Back and Breathe

A simple but effective behavioural strategy that I have used with many traders is once they are in a trade, it goes onside, and they want to stay in the trade, is to ‘push back’ from their screens – to get a bit of distance and to shift perspective – and to ‘breathe’ – focus on slow, deep breaths, which can help to manage any feeling of anxiety or stress.

5. Practise Running Profits

To get better at running profits you need to practise running profits, just like getting better at any skill. There are two ways in which you can practise running your trades further. Firstly is by doing it in real time –physical practise. The second way is by using mental rehearsal, or visualisation, which are used extensively in sports and performance psychology, to imagine yourself in trading scenarios where you are running your profits for further. When you are visualising you are engaging the same neural circuitry within the brain as if you were performing the behaviour for real. Make your mental rehearsal as real as possible by making it multi-sensory -seeing, hearing and feeling – and by including some of those feelings of anxiety that may be there, the aim is to see yourself staying in the trade for longer, overcoming the challenge of your thinking, feeling and urges.  Aim for a few minutes ‘practise’ each day.

Thanks for your question, and let me know how it goes.

Steve Ward
Traders Coach
If you would like a trading performance or psychology question answered by Steve please send it to askthecoach@fxtradermagazine.com