Trading Emotions are natural instinctive state of minds deriving from one’s circumstances while trading. Below are the 6 Most Common Emotions in Trading:
Anxiety is a feeling of worry, nervousness, or unease, typically about an imminent event or something with an uncertain outcome. When entering a trade you may have a feeling of excitement or anxiety, “hoping” that you’ll make money. I find that my Excitement and Anxiety is the most when it is in the beginning of the trading day (Within the first 15 minutes). Best way to combat that is:
- Breathing- Don’t forget this!
- Have a Plan and stick with it!
- Know your stop loss and your exit points
Boredom is the feeling weary because one is unoccupied or lacks interest in one’s current activity.As traders we want to be in trades during the day to make money. There is a huge amount of time during the trading day we are in front of the computer and we may get bored and enter a trade that may not have the best setup. The best way to combat boredom is:
- Set time limits at your desk.
- Take frequent breaks if you are not in trade
- Study if you are not in a trade!
Fear is the unpleasant emotion cause by the belief that someone or something is dangerous, likely to cause pain, or a threat. You can have the Fear of losing money, Fear of missing out on a big trade, and if you trading in Fear, you may not follow your trading Rules. One of the best ways to combat being fearful is:
- Recognize the Emotion
- Don’t enter a trade
- Take Deep Breaths
Frustration is the feeling of being upset or annoyed, especially because of inability to change or achieve something. Frustration can come from missing a trade so you’ll get in the next one, or if you took a loss you’ll double up or trade the stock again to get your money back. A couple ways to combat Frustration is:
- Don’t trade a loser more than once!
- Recognize that not making money is better than losing money!
Greed is the intense and selfish desire for something, especially wealth or power. When beginning trading you may see people on Social Media posting their winners, their expensive cars and you want to emulate them. You may position yourself too large in a position and blow your account out because of it. Get too big and Fear may set in. Couple ways to combat Greed is:
- Recognize that your desire for Greed may negative impact your Trading
- Have a plan of what you want to accomplish
- Set small, achievable goals
Hope is a feeling of expectation and desire for a certain thing to happen. If you are in a trade and you don’t have a plan and it’s going against you, you may “Hope” that it comes back to your target to break even or to be a winner A couple ways to combat Hope is:
- Have an entry and exit planned before entering a trade
- Have hard stops if you don’t have the discipline to get out of the trade at your exit points
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