Social Trading Risk
You will learn about the following concepts
- What is stress?
- Is it possible to control it?
- Stress and trading
- Final Words
Congratulations! Youve come a long since youve started reading this guide. At first, you didnt know what social trading was, but now youre familiar with the core concepts. Youve already chosen a platform, created an account, copied a trader, performed a few personal trades and learned the importance of money and risk management. Youre doing very well for now, but the guide is not over yet. There is still a lot to learn. The idea behind todays topic is to cover some of the basics of stress management. Even though it may not seem so at first, social trading can be quite stressful, especially when you start using your own money in the trades. In this section well help you learn how to mitigate stress and avoid being “caught in the moment”.
What is Stress?
Lets begin with a brief explanation of what stress is. Stress is a normal biological reaction of the body to a perceived challenging or dangerous change in the environment. In other words, its quite normal to feel that youre under stress when there is something at stake. This is the weapon nature has given us to escape tough situations. In fact, a little stress now and then is good. Its not beneficial for a person to be too relaxed all the time. However, when stress is an everyday occurrence, this is when it can become problematic. What makes matters even worse is the fact that stress doesnt have to be caused by something real (you can stress out about imaginary problems and your brain wont be able to distinguish them from the real ones).
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The condition we call “stress” is actually caused by a hormone called “cortisol”. The effects of cortisol in the short run can be stimulating because it allocates more energy to the brain in order to deal with “the danger” were in. However, it merely allocates the energy, which is why cortisol can cause problems in for the overall integrity of the body. One of the affected systems is the immune system, which is why people tend to get sick when they are under a lot of stress. In the long run, excessive cortisol secretion can lead to grave consequences. This is why its essential to learn how to control your stress, especially if you work in a high stress environment.
Is it Possible to Control Stress?
Managing your personal stress levels is quite possible, although sadly is not a simple task. If you want to learn how to control your stress, you will have to work for it. Even though it wont be easy, this will make you happier in the long run. You will learn not to pay so much attention to the small problems and you will be able to focus on whats really important.
Realizing your own imperfections is a great first step for controlling your stress levels. Remember, weve already said that stress is caused by cortisol, and sadly cortisol can be secreted without a real reason. Society is hard on us. There are so many sometimes impossible standards we need to follow that we get aggravated with our own humanity. The truth is that we are not perfect and the standards of excellence society is trying to impose on us are superfluous and deceitful. In most cases what we perceive as “ideal” is really just that – an idea which has nothing to do with reality. By realizing this, you can create more realistic expectations of yourself and others. A side effect is that you become free of others – you know what youre worth so you dont need other people to tell you whether youre good or not. This will alleviate your overall stress levels.
Stress and Trading
If you follow the aforementioned advice in the trading context, then you will be able to manage your stress even as you lose. You are going to lose a lot. This is unavoidable. Thinking that while everyone loses, you will be a prodigy “trader extraordinaire” and you will win 96% of your trades is unrealistic and naive. You will lose a lot and thats normal. Thats just how trading works. Its not a matter of opinion – anyone whos been in the game for long enough will tell you that no matter how good you are, you will lose. The point isnt to strive for perfection, because you will never reach it. The point is to have profits bigger than the losses. If you focus on that aspect instead of every individual loss, you wont stress out that much. However, this doesnt mean that you should disregard losses – you should learn from them. Every loss is a lesson that should be carefully studied. But you shouldnt take it as a personal insult. Once you realize your own imperfection, you will be able to focus on learning trading, and you wont take every loss as a personal insult. This will help you with controlling that stress. If you follow our money and risk management advice, as well, then you should be just fine.
Dont make stress part of your daily routine. Sure, it can be a bit beneficial in small doses, but ultimately it will do more harm than good if you let it. Youll feel a lot better if you dont allow it control your entire existence.