🙊 Emotional Trading

emotional trading – winning the psychological trading game conquering the basic emotional states associated with trading the best emotional trading advice for mentally preparing a trader for success in the market is a simple premise, but it is contrary to our natural state and therefore extremely difficult to achieve to overcome psychological obstacles, we as traders must overcome them and free ourselves from their pushes and pulls the nirvana of trading states is free from the emotions that make us human to better understand these emotional traps, let’s look at all the possible states you will encounter on your path to trading enlightenment jealous traders this affliction, one of the most destructive of the seven deadly sins, will cause you to shift your focus from yourself to other people it leads to an obsession with how much other people are making and can completely consume you this is dangerous because when you focus on other people, it is impossible to evaluate yourself you cannot see what you are doing wrong and what you may be doing right in this state of mind, it is impossible to improve and grow as a trader shame in trading when we put our heads down and go inward, we lose an incredibly important element of external feedback covered in shame, we stop seeking and asking for help, usually because we are so embarrassed by recent losses it is important to be strong and remember that even the best traders always seek advice from people, even if they are ashamed of recent negative trades the best thing to do after a bad move is to stick to your trading plan and move forward don’t get bogged down in negative emotions! pride traders the opposite of shame, this raw emotion occurs when you feel like you are untouchable, the best in the world, etc when you are overcome with pride, you are more likely to take stupid risks, even if they lead to failure, are contrary to your trading plan trading 101 – when you do not follow your trading plan, you get into trouble contempt this emotion is a little harder to identify than the others because it usually leads to pride and can resemble it it manifests itself when you ignore things you should not do, especially your trading plan even if you get lucky and win a trade, this false sense of security will cause you to continue making bad decisions outside of your established program again, as long as you deviate from your trading plan, you are asking for trouble trading depression this is one of the main reasons why people quit trading after a long losing streak, many traders fall into a depressive state depressive periods can also be caused by events outside the trading world a death in the family or other similar negative news can ruin your mood this is another area where following your trading plan can help you ride out the wave of depression keep an eye on your goals and objectives, and don’t let a few losses scare you away trading anxiety in trading psychology, this is an important factor that we can relate to the other negative moods on this list anxiety is a general term that causes stress and interferes with your ability to think clearly and execute trades according to your well thought out trading plan anxiety is often a byproduct of the previously mentioned emotional states such as envy, depression, and shame anger in trading after failing to achieve your goals or being disappointed that other traders are doing well, anger can creep in and take over your emotional state it sounds obvious, but trading in a fit of emotional rage is a no no it can often lead to revenge trading, which is one of the most damaging syndromes a trader can face traders are afraid whether biting their nails or bouncing their knees up and down while watching the market fluctuate on the screen, a trader gripped by fear can become paralyzed there are a number of negative effects that occur when in this state trading happiness while it certainly sounds good, happiness is actually bad as we mentioned at the beginning of this article, any emotional state that gets you into trouble in one way or another in this case, happiness can lead to overtrading or increasing your position size beyond the parameters of your trading plan when trading, it is best to establish neutral emotions not happy, not sad, just calm surprise surprise! the market suddenly surges! you feel the urge to make a move it does not matter if it is in line with your plan you must act now! like anything that makes you put your trading plan on hold, it is bad news always follow your trading plan! emotional trading summary you should have come to this conclusion by now the best mental state for trading is the one that can handle all emotions to do this, you must follow your trading plan never let emotions interrupt your focus and course you must always follow a well thought out, comprehensive plan that you have developed find reasons not to enter a trade, rather than following emotional impulses don’t think about the money or how much you can make just stick to your plan