Trading in financial markets is not just a leisurely pastime in front of a trading terminal, especially one that brings easy money. It’s real, sometimes quite challenging work. This applies more to trading and to a lesser extent to long-term investing. In both cases, high psychological pressures are inevitable. Therefore, no one is immune to emotional burnout—neither traders nor investors. What are the dangers of this situation, how to recognize it, and what to do to prevent or minimize its negative consequences?
In this article you will learn:
- Signs of burnout in traders include loss of motivation, changes in thinking, emotional disturbances, and health issues.
- Strategies to combat burnout involve taking breaks from trading, engaging in full-fledged relaxation, seeking medical assistance, and regaining control over the situation.
- Returning to trading after burnout requires setting clear goals, adopting a step-by-step approach, and gradually accumulating positive experiences.
Emotional burnout — what is it?
The problem of emotional burnout was recognized by the World Health Organization (WHO). The term was introduced in 1974 by the American psychiatrist Herbert Freudenberger. However, it took WHO until 2019 to acknowledge the problem and describe the signs of burnout syndrome.
Doctors call burnout syndrome (or simply burnout) a state of fatigue (up to exhaustion) — physical, mental, emotional, resulting from constant exposure to stressful situations. This chronic stress is not related to circumstances in everyday life but to work.
The risk of emotional burnout for traders is quite high. The specifics of their trading approach involve:
- The risk of emotional burnout for traders is quite high. The specifics of their trading approach involve:
- Constant monitoring of a large number of price charts.
- Searching for the best entry and exit points in the market and closing deals.
Significant pressure in anticipation of profit can also lead to burnout among investors. Although, in general, the danger for them is much less than for traders. The point is that investments usually are intended for long-term horizons and do not require the capital owner to take constant active actions.
According to doctors, burnout develops in three stages. And if in the first two stages (tension and resistance) it can be effectively combated, then in the last one (exhaustion), the consequences can be irreversible. According to observations by the owner of one of the American investment companies, traders after experiencing a burnout are practically unable to return to normal, profitable trading. The number of their successful transactions decreases many times over, as well as the number of transactions in general. Making decisions becomes difficult for them, and with increasing responsibility, they can hardly be relied upon.
The observations described above appliy to professional traders, but for those who engage in trading and investing independently, the consequences can be even more severe. This is due to the impossibility of sharing responsibility, which significantly increases psychological pressure.
Accordingly, it is not enough for a trader to know why burnout occurs. It is necessary to be able to distinguish its signs and take timely measures to protect against serious consequences.
Signs of Burnout
Among the signs of burnout in the early stages, the following are highlighted:
- Loss of motivation and decreased productivity. The main manifestation is when a trader refuses from the usual trading routine, in some cases even avoids opening the trading terminal. It creates the impression that they are not only unwilling to participate in trading but also to solve simpler associated tasks, such as conducting even a superficial market analysis based on indicator readings.
- Changes in thinking. These manifest as decreased concentration, a refusal to make even obvious decisions, and the development of unhealthy suspicion.
- Changes in the psycho-emotional sphere. Typically, the early stages of burnout are accompanied by frequent bouts of depression, feelings of guilt (especially in the event of unsuccessful trades), and fear of new failures. Cynicism in relationships not only with colleagues but also with loved ones appears, inappropriate sarcasm emerges, and conflict increases.
- Health disturbances. Among the most obvious are disruptions in circadian rhythms, such as insomnia at night and daytime drowsiness, increased fatigue, and decreased immunity.
Often, this entire complex leads to the use of psychoactive substances. However, the trader does not realize that alcohol and stimulants will not solve the problem but will only accelerate its development and exacerbate the consequences.
How to Deal with Burnout?
What should traders or those around them do when signs of burnout are detected? Here are a few simple tips:
- Take a break from trading. There is nothing worse than trying to fix the situation by increasing the workload, attempting to trade more and more often. It should be understood that burnout is disguised as laziness, but it cannot be overcome by sheer willpower. Breaks and proper rest are needed.
- Really take time to rest – refrain from constant market monitoring. Change the environment (for example, go to the sea or on a long trip into nature), establish contacts with family, friends, and loved ones.
- Do not neglect medical assistance. Depression, feelings of fear, sleep disturbances are much easier to overcome under the supervision of professional medical staff and with the use of appropriate medications. However, self-medication is strictly prohibited!
- Regain control of the situation. Often burnout is the result of its loss. To deal with the problem, it is necessary to clearly formulate both long-term and short-term trading and investment goals, establish acceptable risk levels (that do not cause significant psychological discomfort), and properly allocate time between work and rest.
When returning to trading, goal setting becomes one of the most serious factors. You should not immediately set global goals. Success in achieving small goals will allow you to accumulate positive experiences again and contribute to accelerated recovery.