Stress in trading is not a psychological weakness. It’s a chemical reaction in your brain, and understanding it as such is the first step toward actually managing it. In episode 190 of Better System Trader, I spoke again with Mandi Pour Rafsendjani from High Performance Trading, a DEX trader with 20 years of experience who also works as a professionally accredited performance coach for independent traders, prop firms, and hedge funds.
Mandi was last on the show in episode 153 in 2018. This conversation picks up three years later, in a market environment marked by pandemic uncertainty, political volatility, and a significant increase in retail participation. The timing is deliberate. Traders of all styles, systematic and discretionary alike, are under unusual stress, and Mandi’s practical, non-psychology-theory approach to performance under pressure is directly applicable regardless of the type of trading you do.
Watch the full episode below, then read on for the complete breakdown.
What stress actually is
Mandi opens with her own definition of stress, developed through years of working directly with traders rather than from academic literature. “Stress is always about fear.” She identifies two distinct forms: the fear of not getting what you want (profits), and the fear of getting what you don’t want (losses). These are not the same fear, and they produce different behavioral patterns. They also respond to different interventions.
Most traders lump both together under “I hate losing money.” But Mandi’s diagnostic process is more precise. When she works with a trader, she traces the fear back to its actual source. A trader who fears losses but has no problem spending freely in every other area of their life is not afraid of money; they’re afraid of something else. One example she gives is a trader who would spend $500 on a family outing without any emotional response, but couldn’t take a $50 trading loss without significant distress. “So it can’t be about the money, can it?”
The neurochemistry behind going on tilt
The practical reason stress disrupts trading performance is straightforward once you understand the mechanism. Stress triggers a chemical reaction that effectively disrupts the connection between the survival brain and the prefrontal cortex, which is the thinking brain responsible for rational decision-making. This is not metaphorical. It’s what Mandi describes drawing on Professor Andrew Huberman’s work, which explains the biochemical process in detail.
When this disruption occurs, traders go on tilt. The behavioral signature is familiar: taking revenge trades after losses to “get the money back,” over-trading under performance pressure, making position-sizing decisions that violate the plan. Mandi’s observation is that these behaviors feel like conscious choices in the moment but are actually automated patterns triggered by the stress response. “It’s like a circuit breaker between the brain and the finger. The brain says don’t do it, don’t do it, and the finger still does it.”
Understanding the mechanism matters because it removes shame from the equation. These aren’t character failures; they’re predictable physiological responses. And physiological responses can be interrupted and redirected with the right tools.
The two parts of fear: early conditioning and trading-specific beliefs
When Mandi works with a trader on their fear of losses, she examines two separate layers. The first is early conditioning: the beliefs about money, risk, and failure that were installed before the person ever entered a trading room. These are often invisible precisely because they’re so deeply embedded. A trader from a background where financial loss was associated with family instability will respond to trading losses differently from someone who grew up in a household where calculated risk was normalized.
The second layer is trading-specific programming: the accumulated experience of past trades, past strategies that failed, past drawdowns that were survived or weren’t. A trader who gave up on a system at maximum drawdown and then watched it recover will carry that experience into every subsequent drawdown, even when the current system is different.
Addressing only the surface behavior, telling yourself to “stick to the plan,” doesn’t work if the underlying conditioning is still active. Mandi’s approach is to surface the specific belief driving the behavior and work on that directly.
The 3M framework for when a strategy stops working
One of the most practically useful frameworks in this episode is what Mandi calls the 3M check, applied when a strategy stops performing as expected. The three Ms are: Market, Method, and Mind.
Market asks whether the market itself has changed: has volatility shifted, has liquidity dried up, has a structural regime change occurred? Method asks whether the strategy itself has degraded: were the rules always sound, or was the backtest over-fit? Mind asks whether the issue is the trader rather than the strategy: are you executing the signals faithfully, or are you introducing discretionary overrides?
Most traders jump straight to the market or method when a strategy underperforms, because it’s easier to look externally. Mandi’s experience is that the mind component is implicated more often than traders admit. Systematic traders are not immune to this. A fully automated system removes most execution error, but the decisions to modify, suspend, or abandon a strategy are still made by a human mind under stress.
Protective pessimism and the limits of positive thinking
One of the more counterintuitive points in this conversation is Mandi’s critique of blanket positive thinking as a performance tool. She introduces the concept of protective pessimism, which involves deliberately considering what could go wrong before putting on a trade. This isn’t negativity for its own sake; it’s preparation. If you’ve already thought through the worst plausible outcome and decided you can accept it, the stress response when that outcome starts materializing is significantly reduced.
Positive thinking, applied without this preparation, leaves traders poorly equipped when trades move against them. The gap between the expected positive outcome and the actual negative one creates an acute stress spike that disrupts the very thinking needed to manage the situation. Protective pessimism narrows that gap in advance.
Recovering from large drawdowns
Mandi covers the specific challenge of recovering from drawdowns that are large enough to create significant emotional impact, either because of the size of the loss in dollar terms or because of what the drawdown means to the trader’s sense of identity as someone who is “good at this.”
The recovery process she describes has three components. First, a structured review that separates what was within your control from what wasn’t, so you know what to adjust. Second, a deliberate reset of your trading size, pulling back to a level where each trade no longer carries an emotional charge beyond your tolerance level, then rebuilding from there. Third, and most important: understanding what story you’re telling yourself about the drawdown, because that story will determine whether the next period of difficulty produces growth or another spiral.
World champion performance under pressure
Mandi draws on her work with high-performance athletes to describe what performing at your best under stress actually looks like. The analogy she uses is from competitive sport: world-class athletes don’t perform well under pressure by eliminating pressure, they perform well because they’ve trained in conditions that closely simulate the pressure of competition. The stress is familiar. The response to it is rehearsed.
For traders, this means building a practice environment that includes stress as a feature rather than something to be avoided. Paper trading at zero stakes doesn’t develop stress tolerance. Trading small real capital in live markets does, because the emotional engagement is real even if the financial stakes are limited. Over time, with structured review and deliberate skill-building, the stress becomes information rather than interference.
Related episodes
- High Performance Trading with Mandi Pour Rafsendjani (episode 153)
- Performance Accelerators with Steve Ward
- Reducing Drawdown with Scott Phillips
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