Controlling trading emotions1.Emotional management in trading.
Developing a clear strategy & a set of rules to follow when executing that strategy, will help you to make decisions objectively and avoid letting emotions cloud your judgment.
Focus on your performance, not your profit & loss account. It is only by focusing on performance that you can understand how your strategy is working.
Then you can build a reliable set of data (over say 100 trades) allowing you to analyse and optimise your strategy.
If you trade spontaneously & your decisions are governed by your emotions, your data will not reflect your strategy & you will never be able to forward test it.
For this reason, use a demo account to develop & practice your strategies. When you trust yourself to adhere to your rules you can commit real money.
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2. Day trading discipline.
Don’t expect to make a fortune every day, and be prepared for losing trades…in fact be prepared for a run of losing trades. It happens to the best of us.
Having realistic expectations can help you stay calm and not get too excited or disappointed by short-term results.
I repeat: Focus on your performance, not your profits & losses. It is your performance that will enable you to eventually become a consistently profitable trader.
If you can make 1% per day, this can compound to 25% per month!!
This is a huge return, unimaginable in almost any other business.
3. Trading stress relief.
Trading can be mentally and emotionally draining, even when you have everything under control. So it’s important to take breaks and engage in activities outside of the market to help you recharge.
Be prepared to stop trading when the targets are hit. Finish the day feeling satisfied & start the next morning feeling confident & in control.
It’s a great way to keep a record of how well you are doing, when targets are hit! It can stop you being greedy & holding on to trades for too long, watching the profits evaporate, which leads to confusion and indecision.
In the worst case it can lead to revenge trading, which very rarely ends well!!
4. Mindfulness for traders.
These techniques can help you stay present in the moment and better manage your emotions.
There is nothing more important than keeping calm & in control of your thoughts & emotions, when trading.
Reading through the rules of your strategy when you are feeling like you are losing control of your decision making process.
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5. Use deep breathing or other relaxation techniques to calm yourself down.
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6. Write down your thoughts and feelings.
Keeping a trading journal is the only way to carefully monitor your progress. It can help you identify patterns in your emotional responses and find ways to better manage them.
This is really important – Reviewing your trades, the analysis that led to those trades, the steps you took & the thought processes involved, is a great way to learn from what you did right & what you did wrong.
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7. Seek the help of a mentor.
A professional can provide valuable perspective and support as you learn to manage your emotions.
The best way to learn a new skill is to practice it consistently and to seek out feedback and guidance from more experienced individuals.
This approach, known as “deliberate practice,” has been shown to be highly effective in research on skill acquisition.
Additionally, setting specific, measurable goals and breaking the skill down into smaller, manageable tasks can help to make the learning process more manageable and less overwhelming.
Questions?
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8. Don’t make decisions when you’re emotional or over stressed.
If you’re feeling particularly stressed or upset, it’s best to take a break and come back to the decision when you’re feeling more level-headed.
Also a good idea to avoid trading when you are tired or hungover!!
9. Use stop-loss orders to manage risk.
Stop-loss orders can help you limit your losses and keep your emotions in check by automatically selling a security when it reaches a certain price.
If you do not use stop-loss orders, eventually you will blow a huge hole in your account and you may lose everything.
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10. Remember that the market will always be there.
It can be tempting to try to make up for losses by trading more aggressively, but this can be a dangerous emotional trap.
It’s called ”revenge trading”, when you feel the market owes you money that it took from you unfairly. This almost always leads to poor decisions, driven by fear & anger and more often than not leads to further significant losses.
It’s important to stay disciplined and stick to your trading plan, even when things aren’t going your way.
Our unique online Technical Analysis & Day Trading course includes free and unlimited private mentor sessions with Jason Sen.
Where else can you learn directly from a trader with almost 40 years of experience?
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Questions?
Whatsapp: +66 971 91 00 19
Telegram: +44 7958 054 659
