Trading Your Emotions and Not Letting Your Emotions Trade for You!
When educating yourself about the stock market, the last thing you would ever associate with trading is human emotions. If you can manage these emotions you are well on your way to successfully implementing one key discipline that is not always spoken about. Trading your own money magnifies the raw emotion that is put upon you when entering, exiting and whilst in a trade. Below are some of the most common emotions in trading:
Anger – Do you ever catch yourself yelling out loud or cursing at the screen? Or complaining about the market like it is out to get you? This is a very common and dangerous emotion. It can easily destroy your belief in trading and the belief in having an edge when trading.
Greed – You see that your trade is well up and you start picturing that new sports car. You think to yourself “if I could just make 50 % more” but what can often happen in these situations is that your profit disappears and your trade is now under water.
Fear – Fear of losing money might make traders skip on a perfectly valid trade. It might also make traders take a small loss on a trade, to then see it turn around and give profit when all the time you were taking the correct steps of entering a stop loss which was never taken out.
Frustration – Why did I not take it? Why do I always take the losing trades and not the winners? These are very common questions a trader asks himself many times during a trading career. This frustration can destroy the motivation and lead to a previously mentioned emotion; anger.
Disparity – Giving up or feeling like it is 3 steps forward and 2 back. Not being able to see the light at the end of tunnel is one of the biggest reasons for traders giving up.
Pain – Financial pain, seeing your hard earned money get swallowed up by the market.
No trader will ever go through a complete trading career without experiencing at least one of the mentioned emotions. Many will even experience them on a daily basis so it is therefore very important to deal with these emotions when beginning your trading career. It can and will likely result in failure if overlooked.
