Trading Emotions: Part 1 – Take Control of Your Emotions or It might Control You

emotions2This is Part 1 of a 2 part series to “Control Your Emotions”.

Take Control of Your Emotions or It might Control You

That’s right. Emotions are one of the Biggest Threat to many novice traders. When you get emotional, the chances are, EMOTIONS COULD TAKE CONTROL OF YOUR DECISIONS.

If you disagree, then ask yourself this:

  • When was the last time you panic and closed out immediately from a trade that turned profitable ?
  • When was the last time you close the month with higher than normal profit and you then started placing trades that were outside your rules, only to surrender your profits back to the market?
  • When we the last time you broke your rules and ended up in profit, which then led to a string of loses because you kept tweaking more rules?

These are just the typical examples of what Novice Traders would do when they get emotional. I’m sure there are many more examples but I think you get the point.

Wake Up Traders!!

Yes, please wake up from these bad habits. When traders are emotional, they often do not realise it. I hate to say this, but Traders usually only get woken up after a slap-in-the-face i.e. after a big drawdown.

My point of this article is really to wake you up before your account gets blown up. For some, this may already be your 2nd or 3rd account that might be blown again. While for some, you didn’t even realise that emotions can empty your account. What ever it is, please do something about it and take control of your emotions.

Prevention is Better than Cure

I’m sure I said this before (See related article) but let’s try a different approach.

The truth is, traders should aim to be emotionally Neutral. (YES, I’m serious, you should aim to be emotionless.)

Some traders get excited each time price moves in their favour. And they get fearful when price go against them. Believe you me; these simple changes in emotions are potentially the root of your emotional turmoil. These small but constantly switching emotions are very unhealthy habits.

Let’s face it, as human beings, being 100% emotionally Neutral may sound like an overly ambitious target. Nonetheless, as they saying goes “a thousand mile journey starts with a single step”,  we should always start by taking small steps to control them.

More importantly, if traders aim and make an effort to be emotionally Neutral, that reduces the possibility for emotions to go viral. And by aiming to be emotionally neutral, we are able to nip the problem in the bud i.e. to control our emotions before it controls us.

 

That’s all for Part 1 of this series. Please subscribe to my newsletters for the next few parts of this series.

Thank you for reading and have a nice day!

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