TRADING STRESS

Stress is one of the most common emotional problems that traders face, and trading while under stress can (read as will) have a significant impact on a trader's profit and loss. There are many different forms of stress, but for the purposes of this discussion, we will consider stress as being either trading stress (i.e. stress caused by trading) or external stress (i.e. stress from non trading sources).
Trading Stress

Trading stress is stress that is caused by the act of trading. For example, the fear of losing money can place a trader under significant stress. Perversely, trading stress only compounds the original problem. For example, if a trader is having difficulty making a trade management decision, the stress that ensues will only make it harder to make the decision, and will almost guarantee that the decision is made badly.

The solution to trading stress is knowledge and experience. Knowledge gives a trader the ability to trade well, and experience (i.e. practice) give a trader the confidence to trust in their knowledge. When a trader knows that they have the ability to be profitable, and they also have the confidence to believe in themselves, it is much easier to overcome any stressful situations that might arise.
External Stress

External stress is stress that comes from any source other than trading. For example, a trader might be having relationship problems with their husband or wife (which happens more often than you might think due to the solitary nature of trading). External stress is the most difficult type of stress to avoid, because its cause is often out of the trader's control.

The solution to most external stress (at least from a trading perspective) is to temporarily trade in simulation instead of trading live. Trading in simulation during stressful times allows a trader to continue trading, but without risking any real money. Once the stressful situation has been resolved, the trader can go back to trading live without having to make up any stress related losses.
How Stress Affects Profit and Loss

Stress affects a trader's profit and loss in a number of different ways, and the exact manifestation will be different for each trader. For some traders, stress might cause them to trade more than usual (perhaps in a desperate attempt to make more money), while for other traders, stress might cause them to trade less than usual (perhaps because they are unable to make any decisions). However the stress is realized, the result will always be a negative impact on the trader's profit and loss. So if you suddenly find yourself trading badly, consider your emotional state and whether that might be the cause, before you decide to make any adjustments to your trading (e.g. changing your trading system, etc.).