Chapter 4: Stress Management

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Trade size

New traders run the risk of exhausting their emotional reserves by consistently trading uncomfortable position sizes. Trading is a business, not an amusement park ride

How to avoid emotional ruin? Remain emotionally neutral

Your trade size should be one that does not elicit any emotional response. If yo experience increased heart rate, this is a warning that you are trading outside your comfort zone

Start small

Start out by trading small, regardless of your access to trading capital, and increase your trade size as your comfort and confidence grows

Decrease your position sizes until your stress levels on entry become completely manageable, and don´t interfere with your ability to follow your trading plan in a relaxed, and disciplined manner.

Risk exposure

The total risk exposure to your account will have a direct impact on your stress level and your quality of life.

Limiting your risk

Don´t overreach. Even if each trade is small, ten open trades, each risking 1% of your total trading capital, has the potential to cause a large, single day drawdown