Emotions and trading don’t go well together


Trading always feels exciting when you first discover it. It doesn’t really matter whether you saw an online broker ad or it was a natural discovery as a finance student in university. Placing that first real trade and watching every tick the market makes feels almost like betting 20 bucks on the roulette. It feels good and you feel alive. Its exciting but that is why gamblers like to go to the casino. Because they love the thrill more than they know it.

Trading is not gambling

That first emotional experience we have with trading often comes with a bit of a beginners luck. You put on your first trade and it makes some profits so you get hyped. Then the market takes back what you made and you feel frustrated. At its core that is gambling.

Trading should not involve the emotional part you use to associate with your actions when you gamble. How do you achieve this? You focus on the long term perspective of your craft and always think in advance so that no single trade can cause too much damage. Applying good risk management principles is by itself a factor that eliminates gambling behavior in the trading room. You just need to make sure you are disciplined enough to stick to your risk management rules.

Its a marathon, not a sprint

Your goal as a trader is to be able to make money out of money for the rest of your life. You aim to build skills that you can always rely on to discover value in the environment around you. Emotions can stand in the way of that goal since we as humans tend to be more and more geared towards instant gratification. Patience is required in all sorts of business but being impatient in your trading could lead to inconsistent results. You should be ready to invest an equal amount of time in developing both trading skills and personal skills that make a good trader. Learn to resist distractions and stay focused, understand compounding and constantly put efforts to improve in the direction you seek to move. Let the magic of compounding magnify your results as time passes.

Eliminate Fear and Greed

If you don’t those two emotions will finish your trading career before you know it. They are the hardest to control but mastering them will open the doors to consistent results in your trading.

You don’t want to close a trade that is losing too much although your analysis tells you that you should? That is Fear.

You want to buy an asset because its largely discussed although your analysis tells you that you shouldn’t? That is Greed.

Understand those two emotions and try to suppress them whenever they try to stand in the way of rational thinking and common sense. Remember that your number one priority in the trading room is survival. You need to protect your trading account at all times from both the market and yourself. And you may be surprised to find out that uncontrollable emotions can cause more damage to your capital than the market itself.

Wishing your successful trading!

 

Risk Warning: The information above constitutes Marketing Communication and does not constitute Investment Advice or Investment Research. The content of the analysis represents the view of our experts on a generic basis, and do not take into consideration individual readers personal circumstances, investment experience or current financial situation. In addition, the analysis above has not been prepared in accordance with legal requirements designed to promote the independence of Investment Research. Readers using the above information should consider the possibility of encountering substantial losses. Therefore, UR Trade Fix Ltd shall not accept any responsibility for any losses of traders due to the use and the content of the above analysis.”  Further to the above ,Forex Trading involves a substantial Risk of Loss and may not be suitable for all Investors. Please see our Website for details regarding UR Trade Fix Limited’s Trading Terms, Policies and Offerings.Read more.

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