Impact of Trading Psychology On Futures Trading and Investing
According to scientific research, a person’s perceived control over the outcome of a specific situation or event is the largest factor in psychological stress. While, people in reality have a lot less control over their life than they really lead themselves to believe, most people psychologically believe that they control much of what happens to them. The spouse of a trader has no control over markets, trading results, or monthly income and is forced to accept this truth.
Since most traders even those who have been in the business for decades have good months and bad months, the stress that the spouse experiences may often times come out and cause tension between members of the household. Many times I’ve heard from traders who dread coming home after a losing day, fearing accusations and negativity from a stressed-out partner.
To solve this problem, the futures or commodity trader needs to take responsibility for these perceptions and do everything possible to make their spouse feel secure about the family’s financial future. The best way to deal with this problem is head on, this will relieve the largest portion of the stress. When the spouse sees that you are concerned about the same issue they will feel more relaxed and calm knowing that you are aware of how they feel, this is the first step.
The second part is creating a budget and the discipline to follow it so that during loosing periods and winning periods the spending is about equal. What many traders do is set aside a portion of their monthly income into a special account.
This account becomes a back up fund, when a losing month occurs; the trader takes the difference that was lost from the backup fund and when the trader has a winning streak he puts a percentage of his winnings back into the fund. This way the trader brings home a consistent flow of income, something that makes it easier for the spouse to budget and plan; this creates more certainty and predictability about the future and will help your spouse relieve stress and feel more confident
Many people in creative businesses such as art and entertainment who do not have consistent monthly income create backup accounts to help create consistency and predictability during slow times in their careers.
The second biggest reason for disharmony between traders and family member is loss of common interests. Believe it or not as simple as it sounds, trading can be very emotionally absorbing. Most traders, especially successful ones have a high degree of concentration and focus and are constantly absorbed by markets. It creates problems precisely because the absorption in trading prevents the trader from fully participating as a partner and parent. Over time, that can only lead to conflict and resentment. It is in such a situation that spouses then find it difficult to be supportive of their partner’s needs and challenges.