Control Your Emotions in Trading !

[GlassOnion 12]

Traders who cannot control their emotions will rarely make any successful trades and will quickly join the 95% of traders who lose money consistently.

 

The three emotions that traders suffer from are; fear, hope and greed. To be successful you need to suppress these emotions, banish them like demons.

 

 

All these emotions are detrimental to making money and being a good trader. Some traders even have all three emotions at some point in time. So how can a trader suppress these emotions?

 

 

Firstly, don't take high risks by trading more of your capital than you should. A rule of thumb is to not risk more than 5% of your capital ( MAX ) on any one trade. If you keep to that rule there is no chance to lose all your capital.

 

Make a plan and stick to it. Make yourself a set of rules and keep to them. For example if you have a rule which says that your risk reward ratio is 1:2 or 1:3 then keep to it. You'd be surprised how many traders reverse their risk reward ratios.

 

Comments and/or Tips welcome.

[Rande Howell 10]

  GlassOnion said:

 

The three emotions that traders suffer from are; fear, hope and greed. To be successful you need to suppress these emotions, banish them like demons.

 

 

All these emotions are detrimental to making money and being a good trader. Some traders even have all three emotions at some point in time. So how can a trader suppress these emotions?

 

Good luck with this kind of reasoning. It is not freedom of emotion (much less suppressing them) that a trader needs for a successful trading mind -- it is freedom of emotion.. It is about the intelligent use of emotion that a trader needs to learn.

 

Rande Howell

[tradingwizzard 10]

easy to say then done.........sometimes you wait for your risk reward to hit 1:3 and not exiting the trade because you wait for the last pip...........however, the last pip is in most cases the most expensive one....so pro's and con's on this approach

 

anyways, thank you for your post

[Guest OILFXPRO]

Emotions control you ,every tick up is playing with your emotions , every tick down is your emotions playing on you ( like fear of losing , getting it right , revenge , stress , stress responses , losses and losing set ups of profitable technical analysis memory emotions ,market taking your money with false moves and your wanting it back (desire) , wanting to hit the market in anger , greed at wanting more ).

 

Unless you have robots executing trades , tickitis will ruin you as every tick plays on your emotions.

[Rande Howell 10]

  OILFXPRO said:

Emotions control you ,every tick up is playing with your emotions , every tick down is your emotions playing on you ( like fear of losing , getting it right , revenge , stress , stress responses , losses and losing set ups of profitable technical analysis memory emotions ,market taking your money with false moves and your wanting it back (desire) , wanting to hit the market in anger , greed at wanting more ).

 

Unless you have robots executing trades , tickitis will ruin you as every tick plays on your emotions.

 

we should alert the armed forces to this deterministic point of view. Maybe they will stop training soldiers to certain kinds of emotional responses in the context of combat. When you learn to know yourself, emotional response to circumstance can, and does, change.

[primetrader 10]

Do not give stress and pressure when trading forex. Trade in a comfortable enviorment but not to cozy of course with some very light music. Do not set any target or force yourself to meet any target. The trend is our target.

[Chartsky 10]

@GlassOnion . . . I agree completely.

 

To be successful in the long-term, a trader must remove as much emotion as he/she can from their trading.

 

However, it's easier to understand the concept than it is to actually do it. I've traded full-time since 1999 and still, to this day, find myself allowing some emotion to creep-in at times. Mostly frustration with all the computer whip these days -- but that's still an emotion and it can cause me to take an entry I might not have taken without it.

 

You've listed the ones most commonly discussed: fear, greed and hope

 

I think folks should make a well-considered, written Trading Plan and stick to it. If you see a set-up that's not on your plan, as you review it and your charts each weekend, back-test over a year or so prior charts and, if it's still valid, then add that scenario and trade it from then on. If one stops working in a particular market, take it off. If a trade isn't on your Plan you can't take it. Period. Entries, stops and profit targets, as well as markets traded, Daily Profit Targets and Daily Loss Limits, realistic weekly and monthly goals are all included in the plan. That's one thing I did that helped me turn the corner years ago.

 

Good Luck!

Chartsky

www.chartsky.com

 

 

  GlassOnion said:

Traders who cannot control their emotions will rarely make any successful trades and will quickly join the 95% of traders who lose money consistently.

 

The three emotions that traders suffer from are; fear, hope and greed. To be successful you need to suppress these emotions, banish them like demons.

 

 

All these emotions are detrimental to making money and being a good trader. Some traders even have all three emotions at some point in time. So how can a trader suppress these emotions?

 

 

Firstly, don't take high risks by trading more of your capital than you should. A rule of thumb is to not risk more than 5% of your capital ( MAX ) on any one trade. If you keep to that rule there is no chance to lose all your capital.

 

Make a plan and stick to it. Make yourself a set of rules and keep to them. For example if you have a rule which says that your risk reward ratio is 1:2 or 1:3 then keep to it. You'd be surprised how many traders reverse their risk reward ratios.

 

Comments and/or Tips welcome.

[Guest epic research]

There is no value of emotion in trading. As one may suffer from loss, but by getting emotional is not the solution, no matter what you are, you have to bear loss.

[Guest OILFXPRO]

  epic research said:

There is no value of emotion in trading. As one may suffer from loss, but by getting emotional is not the solution, no matter what you are, you have to bear loss.

 

A losing trade should be empowering , if you did your job correctly

[wmck6167 10]

Your emotion is interacted with market (maybe from alogrithm design, I think), you are more or less passive in this game and it's hard to control it since your personality is hard to be changed, I think. However from my experience, you may be able to find another system you can focus on to interupt the interections and change the distribution of statistics on your buying and selling based on mental side. But saying is easier than doing. The strength is built on the the experience of failture and discipline and power of obidence, and maybe more ....or on your personal belief. Just provide personal opinion. Maybe there is one personal can really control his emotion.

Edited January 28, 2014 by wmck6167

[Rande Howell 10]

  epic research said:

There is no value of emotion in trading. As one may suffer from loss, but by getting emotional is not the solution, no matter what you are, you have to bear loss.

 

The biggest value I see to emotions is that without them, you are dead. Emotions are woven into the very biological substrate of your brain/mind. Rational is an emotional state that creates a certain kind of thinking useful in probability thinking. To push fear aside and pretend that it is not part of the mix is the set up for emotional ambush by unseen forces. If you experience tenseness in body or holding breath or rapid, shallow breath as you trade, you are experiencing an emotion. Not noticing the emotion and not managing it is the danger.

 

Rande Howell

[davidjohnhall 10]

To be successful you need to suppress these emotions, banish them like demons.

 

I have to respectfully disagree with the OP here. I'm of the opinion that, to be a successful trader, you have to UNDERSTAND your emotions. To accept and welcome them. Guys especially. Your emotions will obliterate any chance you have of success if you even try to ignore them. That's because trying to suppress emotions is like trying to hold a beach ball underwater. It will be draining and it will take all of your energy.

 

Instead, the best way out is through. If you are getting emotional over your trading, find out why. Journal about it. Discuss it. Find out where the feelings come from -- your feelings about money, your feelings about yourself, your feelings about success and failure, etc.

 

I think Bill Williams discussed a river analogy. That the river bed creates the river conditions you see on the river's surface. Your job is to smooth out the river bed.

 

Take this quote from Mark Douglas from Trading in the Zone: Traders usually experience a great deal of pain (both emotional and financial) before they acquire the kind of attitude that allows them to function effectively in the market environment.

 

That pain is a birthing process. The acknowledgment of your emotions rather than a banishing of them. And once you go through it you find that your emotions will no longer be a threat because they have been integrated and not outcast.

 

Just my experience.

 

Good luck all!

[T.Chivers 10]

I just take the silly approach not to take negative trades personally & take a break when trades are not going my way. Sometimes just taking a step back & not adding extra pressure on yourself can make a difference in getting back on the winning track.

[fxeconomist 11]

  T.Chivers said:

I just take the silly approach not to take negative trades personally & take a break when trades are not going my way. Sometimes just taking a step back & not adding extra pressure on yourself can make a difference in getting back on the winning track.

 

Yeah, breaks are very important in trading. Doing this you protect yourself from overtrading and hence aggravating situation..

[Guest OILFXPRO]

  Rande Howell said:

we should alert the armed forces to this deterministic point of view. Maybe they will stop training soldiers to certain kinds of emotional responses in the context of combat. When you learn to know yourself, emotional response to circumstance can, and does, change.

 

One needs to be emotionally stable and mindful of the emotional triggers , but doesn't that requires a disciplined mindset that is totally focused ?

[Rande Howell 10]

  OILFXPRO said:

One needs to be emotionally stable and mindful of the emotional triggers , but doesn't that requires a disciplined mindset that is totally focused ?

 

I've know very few people who can maintain a disciplined mindset that is totally focused for extended periods of time. Brain's need for glucose replenishment is real for being focused and alert. Traders I work with seem to be able to maintain focus for somewhere between 30 minutes to 1.5 hours at a time. Then breaks are needed to refuel. Scheduling breaks gives the trader time for his brain and mind to replenish and prepare for another high concentration period. Otherwise thinking quality is compromised.

 

Rande