To begin with, understanding the emotions while trading can bring you a lot of support during profit or loss. You need a clear mindset for taking better decisions in trading. For a consistent trading, having a calm attitude is also important.
NEED TO CONTROL YOUR EMOTIONS WHILE TRADING
When you think your expectations are failing, your emotions will take over. There will be a ‘fight or flight’ situation. This instinct has the ability to prevent us from achieving our goals. When it comes to trading, this could be a very troublesome situation. You clearly don’t want to ruin your accounts by rushing on some decisions without much thinking. To take control of the emotional trading, it will take some time and practice.
COMMON EMOTIONS A TRADER EXPERIENCE
- Nervousness: Trading with inappropriate size increases volatility unessentially. This motivates you to make mistakes you usually does not make. In this situation, you will be under a lot of pressure of risking huge losses than usual. This is a natural cause of nervousness. Nervousness also pops out when you find the wrong trade that does not suit your trading strategies.
- Excitement: Excitement is a key emotion that every traders have to go through. If you don’t feel the excitement yet, it means that you are in the wrong trade for you. If it fits your trading plan, then the excitement will keep you go on through the profits and losses easily.
- Greed: You will know you are being greedy when start choosing the trades that provide big wins only. This greed could be because of your current positive win state. But, a single carelessness can cost you huge losses. Therefore, always be sure to check the risk management techniques for avoiding huge losses.
EMOTIONAL CONTROL: TIPS AND APPROACH
- Setting personal rules: Creating your own set of personal rules makes it much easier to control your emotions while trading.
- Determining right market conditions: Finding the right market conditions for trading is an important idea. If you are not feeling a good vibe with the market, then it is better not to trade.
- Lower the trade size: Lowering the trade size is one of the easiest way to control your emotions while trading. You should never put yourself in a position where the odds of win are not in your favor.
- Create your trading strategy: Basically speaking, planning the various outcomes of your decision is also a great plan. There is always a big difference between new traders who use trading strategies.
While trading, you have to relax and enjoy every moment whether its a win or loss.