Fri05242013

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PREPARING FOR THE STRESS

Is there a way to prepare for the stresses that come with trading futures, options, and forex?

Trading on leverage is stressful and tends to take an emotional and even physical toll on those involved. Unfortunately, I don’t know of any preparation, action, or even substance that is capable of eliminating the impact of the strain once it has reared its ugly head. Nonetheless, it isn’t a coincidence that downtown Chicago is littered with brewpubs; some find it is the only way to ease the anxiety of a tough trading day.

Nothing burns off anxiety like a good run after the close of trade!The best way to manage stress is to take measures to avoid it by concentrating on a trading strategy that conforms to your personality. If you are a high-strung and risk-averse individual, trading outright futures without using option hedges is probably a bad idea. Doing so could engender undue mental strain and trigger poor trading decisions. On the other hand, if you are patient and can be satisfied with the prospects of low returns in exchange for low risk, you might want to consider an option spread trading strategy.

It is nearly impossible to avoid all stressful situations, and despite risk management techniques, there will be times of intense duress. In my experience, the best way to combat the physical tension of a desk job and emotional turmoil of trading is consistent exercise. Nothing burns off anxiety like a good run after the close of trade!

Originally published in the August 2012 issue of Technical Analysis ofStocks & Commodities magazine. All rights reserved. © Copyright 2012, Technical Analysis, Inc.


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