Trading can be a very lucrative profession, as successful traders can earn a significant amount through taking large financial risks.
By the same token, it can be extremely stressful, as there is always a lot to lose if it goes wrong.
Why do many traders have mental health issues?
That is why lots of traders suffer from mental health issues. In fact, according to social initiative Buy-side Trading Community, 38 per cent of traders suffered with poor emotional wellbeing in 2022.
Financial crisis
This figure more than doubled from the 18 per cent who claimed to have suffered from mental health problems just the year before.
This suggests that traders have found their jobs even more stressful since the pandemic, which resulted in the global economy taking a huge hit.
The survey stated: “It is important to note that in 2022, the buy-side traders experienced a number of pressurising and stressful market conditions due to global market volatility, inflation, geopolitical instability and conflicts which are aptly reflected in the survey results.”
Struggle to work from home
Although flexible working was considered to be one of the advantages of the pandemic, with more people able to enjoy a better work-life balance, many workers have found working from home difficult to get used to.
More than a third (35 per cent) of traders said they missed having face-to-face interactions with fellow members of staff. This was a five per cent increase from the year before.
The proportion of traders who claimed to prefer working from home also fell from 25 per cent in 2021 to 12 per cent the following year, suggesting many prefer the office environment, particularly in what can be a lonely profession.
Poor work-life balance
Although working from home is meant to improve the work-life balance, many people find it difficult to switch off if they are always able to access work at home.
The work of a trader can continue for 24 hours a day, as the markets never stop. This makes it even harder to put the phone down or close the laptop, knowing things are happening to the markets that could impact shares.
Nearly a third of traders (30 per cent) said finding it difficult to separate work and life was the biggest disadvantage of today’s hybrid working models.
In addition to this, more than half (53 per cent) said having a lack of work-life balance was the main cause of their mental health struggles.
Reduced focus since Covid-19
Businesses paid particular attention to the mental health of their employees during the pandemic, as it was such an unprecedented time and had a big impact on everyone’s emotions.
However, since then, there has not been as much focus on employee wellbeing.
The survey, therefore, concluded: “Asset management and hedge fund firms still need to ensure this topic is at the top of their agenda and that they continue discussing how they can help employees deal with all issues triggering mental health.”
Stress
Of course, the most obvious cause of mental health problems for traders is the amount of stress they are under.
Having to make quick decisions and react promptly to market changes can certainly make your palms sweaty, get your heart beating faster, and put your nerves on edge.
Stress is, in many ways, what makes traders successful, as they take big risks and care about their actions.
However, stress can also have a big impact on mental and physical health. For instance, it can weaken the immune system, result in high blood pressure or even bring on heart disease.
It can also lead to cortisol dominance, which shortens attention span, and affects learning and memory.
Stress and anxiety are also interlinked, with anxiety occurring when the restlessness, nervousness and feeling of overwhelm does not subside.
The more stressed people are at work, the more anxious they are likely to become in their everyday lives.
Medical News Today recognises: “Stress is the body’s reaction to a threat, and anxiety is the body’s reaction to stress.”
When anxiety becomes extreme, it can turn into anxiety disorder, with the sufferer experiencing irrational fears, prolonged low moods, and even suicidal thoughts.
It can also have a negative impact on work, as sufferers are unable to think clearly, act impulsively, and cannot perform to their best ability. This could lead to a sense of failure, which is likely to fuel their anxiety even more.
Ways To Improve Mental Health As A Trader
The first step to improving your mental health as a trader is to recognise you might have some difficulties, or at least, you could if you do not take steps to alter your lifestyle now.
Take gradual risk
As stress is such a problem for traders, it is important to familiarise yourself with ways to reduce this.
Firstly, avoid increasing risk too quickly. You might want to plough significantly more money into a trade you were successful in before, but this could result in substantial losses if it does not go to plan.
“The added pressure of the bigger profit/loss swings adds too much stress,” the London Academy of Trading stated.
“A gradual ramping up of trading size is far easier on your mental health than an impulsive leap for which you may be emotionally unprepared,” it advised.
Setting yourself risk management limitations is also a good idea, from diversifying investments to restricting exposure to volatile markets.
Rehearse threatening situations
To avoid stress levels soaring, it is a good idea to think of the most threatening situation you can imagine and practise how you would respond to it.
Much of people’s worry is not knowing what to do in difficult scenarios, but if you have a plan of action, this will provide reassurance you can stay calm and collected.
A lot of people stress about ‘what ifs’, so if you eliminate the fear of the unknown, you can prevent yourself from catastrophizing.
Improve work-life balance
It may be difficult to switch off from work these days, especially when it is so easy to take it home, but it is important to have some downtime.
Lots of traders get consumed in their trading world, but you should aim to have a social life, hobbies and interests to pull you out of it from time to time.
This could include doing exercise, going to the cinema, learning a new instrument, or catching up with friends.
The London Academy of Trading said: “By placing your self-esteem eggs in a number of different baskets, you can stop bad periods in your trading from disrupting your self-confidence and mental health.”
Concentrate on growth
It is all too easy to become too focused on financial gains as a trader, which means any loss, or even marginal profit, feels like a failure. This is why it could be a good idea to shift the mindset to concentrate on growth.
For instance, you should focus on the trade plan and believe the strategy will work effectively. This will also stop you from acting too impulsively, which could result in bigger losses in the long-run.
Take breaks
Do not let yourself become consumed by work and market fluctuations by staring at the screen all day long. Instead, make sure you take breaks, go for a walk, move your body and give yourself a few minutes to recharge and refocus.
Practice mindfulness
Mindfulness has gained popularity over the last few years as a way to improve mental health, as it reminds those who practise it to focus on the present.
Traders are always trying to be one step ahead, so it can be hard to concentrate on the here and now, which is why taking a few deep breaths, practising gratitude, and awakening senses could help.
Yoga, meditation, or even some desk activities like colouring in can really help bring them out of a negative state of mind.
Focusing on the positive and reminding themselves of success can also help traders build resilience. A trader with a thick skin certainly shows strength and courage, and looks as though they are not afraid to take risks in the future.
Counselling
Traders who find their mental health declining rapidly should act quickly and seek professional help.
It is not a weakness to talk to a counsellor about their thoughts and emotions, whether it’s the amount of pressure they are under, their stress levels, or their struggle to find a good balance that works for them and their families.
In fact, talking therapies can help traders last much longer in the industry, avoiding burnout and reminding them why they love, and are exceptionally good, at their profession.
