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62 THE DAILY TRADING COACHexperience day after day, week after week, and you can see how frustrationwould build. Out of that frustration, traders may double up on positions,even as opportunity is drying up. I’ve seen traders lose significantsums solely because of this dynamic.Alternatively, the trader who is calibrated to lower volatility environmentswill place stops relatively close to entries to manage risk. As marketsgain volatility, they will blow through those stops—even as the tradeeventually turns out to be right. Once again, the likely emotional result isfrustration and potential disruption of trading discipline.Both of these are excellent and all-too-common examples of how poortrading can be the cause of trading distress. It may look as though frustrationis causing the loss of discipline—and to a degree that is true—but anequally important part of the picture is that the failure to adjust to marketvolatility creates the initial frustration. Any invariant set of rules for stops,targets, and position sizing—in other words, rules that don’t take marketvolatility into account and adjust accordingly—will produce wildly differentresults as market volatility shifts. For that reason, the market’s changesin volatility can create emotional volatility. We become reactive to markets,because we don’t adjust to what those markets are doing.Poor trading practice—poor execution, risk management, andtrade management—is responsible for much emotional distress.Trading affects our psychology as much as psychology affects ourtrading.Personality research suggests that each of us, based on our traits, possessdifferent levels of financial risk tolerance. Our risk appetites are expressedin how we size positions, but also in the markets we trade. Whenmarkets move from high to low volatility, they can frustrate the aggressivetrader. When they shift from low to high volatility, they become threateningfor risk-averse traders. The volatility of markets contributes to volatilityof mood because the potential risks and rewards of any given tradechange meaningfully. In the example from my blog post, that shift occurredwithin the span of just a few months.Note that traders can experience the same problem when they shiftfrom trading one market to another—such as moving from trading the S&P500 market to the oil market—or when they shift from trading one stockto another. Day traders of individual equities will often track stocks ona watch list and move quickly from sector to sector, trading shares withdifferent volatility patterns. Unless they adjust their stops, targets, and positionsizes accordingly, they can easily frustrate themselves as trades get