Low-Stress Trade Management

New York Stock Exchange, 1909

New York Stock Exchange, 1909

Trading can be quite stressful. This reality is one that most new traders never consider.  Have you ever felt your heart pound and your palms sweat when you opened a new position?  Marty Schwartz has been one of the most profitable and successful traders in America over the last thirty years.  His story was detailed in Jack Schwager’s best-selling classic, Market Wizards, and Schwartz actually went on to write his own autobiography, detailing his own trading journey, called Pit Bull Trader.

In the late 1970’s, Schwartz was a financial analyst on Wall Street.  Over the course of many year, Schwartz managed to lose thousands of dollars trading the market.  Around the age of 30, he finally decided to approach trading seriously.  He saved up $100,000 (which was a considerable sum 30 years ago), bought a seat on the Exchange, and began trading.  In his first year, he earned around $600,000 in trading profits, and he never looked back.

In his personal autobiography, Schwartz offers aspiring trader a rare look into the psychological reality of a trader, and it is quite surprising.  Schwartz is continually battling incredible amounts of stress that cause health problems.  He had regular ulcers and eventually he suffered from a serious heart attack after trading for over 10 years.  The heart attack slowed Schwartz down.  He scaled back his fund management operation and began to approach trading differently.  The reality is that trading is stressful.

Most new traders enter trading the forex market because they are seeking a stress-free lifestyle of financial independence; therefore, they are quite surprised when they realize just how hard trading really is.  There is a specific shift of perception that every trader must go through in order to create a low-stress trading environment, and the shift is a direct result of realizing that one cannot control the output of his trades, he can only control the input.  Let’s break this down further.


The output of a trade is defined as the trade’s outcome.  Was it a winner or a loser?  Did the trader make money or lose money?  This is the outcome, or the effect of the trade.  New and struggling traders have a difficult time realizing that they have no control over this.  During a trade, most new traders see their open PnL rise and fall on a tick by tick basis in their forex account, and it nearly does their head in.  If a trader feels a pit in his stomach, sweaty palms, or a loud heartbeat when he is trading, then the reality is that his focus and perception is still on the output of a trade, and not the input.


The input of a trade is simply the trade a trader executes in the market.  This is what a trader can completely control.  Financial markets as a whole simply cannot be controlled and no specific output can be wrestled from the market.  The market is going to do what the market is going to do.  This is essential to understand.  A trader’s power lies in his ability to control what he puts into (input) the market.  If a trader keeps his focus on executing perfectly, then the output will take care of itself.  When perceived this way, trading becomes much less stressful.

Once a buy or sell order is executed, there is nothing else a trader can do.  Sure trade management is very important, and a good trader will manage his trade much differently from a new trader, but the truth is that if the focus remains on simply perfecting inputs, then the outputs will take care of themselves.  Remember, trading is a business that deals strictly with probabilities, never certainties.

This is a sponsored guest post on Low Stress Trade Management. I welcome the different opinions and insights that guest posts provide. If you would like to guest post on Little People Wealth then feel free to contact me.

{ 2 comments… read them below or add one }

1 Jonathan Poland December 12, 2010 at 11:10 am

Interesting post. So true on probabilities at the end. In my experience it’s easier to judge the probabilities of businesses than almost anything else however, so trading Forex seems to be left in the hands of expert algorithms.


2 Heidi December 12, 2010 at 5:48 pm

Forex is tough to trade. I tend to stick with businesses as well.


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