In today’s post, I want to give you some insight on how to reduce your mental stress and the overwhelming complexities of trading.

How do you do that?

Well, it’s quite simple.

Reducing Stress While Choosing What you Want

I’ll show you an example.

When you’re looking for a place to eat, where do you go?

Here’s top 250 restaurants – different restaurant chains.

You’ve probably heard of some of these no matter where you are in the world:

• McDonald’s 
• Starbucks 
• Subway 
• Taco Bell 
• Chick-fill-A
• Burger King 
• Wendy’s 
• Dunkin’ Donuts 
• Domino’s 
• Panera Bread 
• Pizza Hut 
• Chipotle 

There are so many restaurants out there. And if you had this list in front of you and you could snap your fingers and go to any one of these which one would you go with?

That’s the tough part because there are so many restaurants out there. It makes it challenging to choose and pick. 

Some of these things can be reduced based on your location. That simplifies the decision. This list could be reduced based on your cravings. What are you craving for? Where have you had good experiences, bad experiences? Where do your friends like to go to?

All of a sudden, the list starts to narrow down because of your habits. When it comes to trading, especially if you’re new, you don’t have those habits in place yet. You’re still building those habits. Now what’s important to realize and recognize is that when you have a simple list of just 3-5 restaurants, it makes your life decision-making process a lot easier.

It’s just like having a menu that only has maybe ten things on it makes your life a lot easier. But when you have a menu with 57 different items that you could choose from, it makes it much more difficult. 

It’s the same approach when you go to college. If you’re choosing the best college or university for you, you could look at a list of top 50 schools and colleges. 

They rank them based on what? Probably salary coming out. It could be based on prestige. It could be a lot of other factors.

But what if you want to be a welder or a photographer, going to Princeton may not be your best bet. It might be better and smarter to go to a technical school. It might be better and smarter to go and work with someone who’s a professional photographer and bypass the whole college altogether.

I’m not saying you shouldn’t go to college; there’s a place and a reason for that. But knowing and understanding why you’re doing something and the constraints, it makes more sense of your choice.

How to Simplify Your Trading?

The thing is if you’re looking to reduce that mental burden and the overwhelming things that are happening in your mind, it’s best to simplify things.

If you’re looking to choose a school or a college and you’re looking to do one in your state or within 50 miles of your current home or your parents, it makes things a lot easier.

It makes things much more simple, and it’s not as overwhelming. It’s not as stressful. People frequently, when they do go into trades, look at watch lists. And they start creating a scan. The conditions that they look to scan is huge.

Let’s say we’re looking at conditions and formulas. I might have a condition here where it’s stocks that are in the Russell $11 and more. And let’s do a scan. All of a sudden, I have 955 stocks.

And I have to go through these to figure out which stock works for me and my preference. If I want to reduce that and I want to change this from $11 to $91, I can do that.

Then I’ll get stocks that are more pricey and expensive. Now I could do the scan, and that reduces my results to 276 stocks.

That is a lot better than a list of 900 stocks. Plus, it’s a lot less work. 

Pro Tip: That’s your goal as a trader to reduce your mental overwhelm. Fine-tune things to simplify things to make it less complicated.

If you want to do a list of maybe the SP500 and then narrow it down even further, you could do that. If you’re going to do popular companies that are trading a high share amount or a high-volume amount, you can do that as well.

You might use only popular companies like:

• Microsoft
• Apple 
• Disney
• NVDA

These are the most popular companies because they’ll probably pay dividends. They’ve probably been around for a while. Not saying that’s always the case, but you could stick to that range.

You’ve probably heard of things like Nvidia or Disney or Procter & Gamble or Johnson & Johnson and Netflix and PayPal and Lowe’s.

There’s a lot of companies out there. Walmart, Adobe, Home Depot are some of the popular ones.

Also, there are MasterCard, PepsiCo, and Boeing. That’s the thing. If you have a group of stocks that you’re watching that’s small (20-30 stocks), it makes things a lot easier. If you have (when it comes to option trading) just 3-4 strategies, it makes things a lot easier.

All of a sudden, you’re not overwhelmed. If you manage your trades one or two ways, maybe three ways at most, it makes things a lot easier. 

Most Common Mistakes When Trading Stocks

What people tend to do is they start a big scan list. Or when it comes to options, they put on one trade than another trade. And they try and change it or adjust it one way then another way than a third different way.

They are trying to hit different things at different points. But there’s no consistency to it. I think that’s fine at the beginning when you’re first getting started. But as you’ve built a strategy up and you’ve seen what works for you and what doesn’t, you want to fine-tune those things.

As you dig deeper, start simplifying things.

When you can simplify things, this is what you get:

• it makes your mental overload a lot easier makes the decision-making a lot easier
• you can trade execute a lot faster
• you can decision execute faster 

There’s a lot less lag time, which means you’re getting better fill prices as you’re getting into the trades. That’s usually because you’re making those decisions faster ahead of time and more efficient.

Final Word

I hope this was helpful. Start simplifying things — not only in trading but also in your life.

Benefits are numerous if you can simplify things when you’re trading stocks, options, or investing.