EMOTIONAL MANAGEMENT in Trading

Finance concept

We all know that emotions can affect our judgment when we trade. That is why, we are going to describe the most important emotions that we need to control:

The rules are unique for each person. You have to fix your own rules according to your personality. Each time you take a decision, you can try to put your decision into an emotion and check if you respect your own rules. Remember that human is emotional so decision can be. If you think that your emotion wasn’t rational, you were under pressure so you focus and be honest with yourself. These rules permit to fix a philosophical thinking of trading that reach the discipline necessary, so you can change it and adapt it during the time you trade and learn about yourself.

EGO

  • Choose the opportunities
  • Make a break every 5 winings in a row
  • Looking ourself objectively
  • Have a good strategy doesn’t mean being a good trader
  • Do not overestimate yourself (70% of people do)
  • Only the market is right
  • Using logic skill and not instinct
  • Do not lie to yourself, don’t exagerate the facts
  • Focus on the process and not the result

APATHY

  • Continuing review positions and work with discipline
  • Do not play a game
  • Sports to get more mental
  • Always thinking to improve yourself
  • Get out of the routine if necessary
  • Doing other things than trading, find a balance life
  • Be passionated of work
  • Do not give up face to difficulty
  • Mental, Discipline and Rigor (MDR)
  • Be in good health when trading (eat breakfirst)

EAGERNESS

  • Precipitation lead to fail
  • Using confortable money management for feeling relax
  • Eagerness lead to Ego
  • Make regular breaks after every trades
  • Taking time to take a decision is a good strategy
  • Do not be influenced by other people
  • Discipline is more profitable
  • We take decision to win money, even it is boring
  • Better quality than quantity
  • Precipitation can show a big variation of results
  • DO NOT fall to risk all the money, keep mental
  • Take responsabilities

CERTAINTY

  • Do not find certainty in our position
  • Certainty is a wasting of time
  • It feed our ego
  • There is no certainty on uncertin market
  • Theorical results is just forecast
  • Always find to improve our strategy and backtest it
  • Do not think against-productive
  • Learn slowly
  • Stay focus on the process of the strategy before getting conclusion

ETHICS

  • We are not Jesse Livermore
  • We all have weakness
  • What we perceive is limited at what we know
  • 70% of people overestimate themself
  • A man without weakness is a man without emotion
  • Emotion is natural

MISCONCEPTION

  • Do not fall on wishful thinking
  • Do not stuck on one position result
  • Money come and back naturaly
  • Misconception make people blind
  • Succes is disproportionate
  • If there is market, there us money
  • We are not right, only the market is right
  • Study books don’t being more profitable « loosing time »
  • Target break even is not profitable
  • Emotion are natural and needed but have to be canalized

HEURISTIC

  • Focus on processus
  • Don’t be influenced by results
  • Pass results have to be canalized, it leads to greed
  • There is no chance or luck on random market
  • Do not react from revenge of the past

ANXIETY

  • We trade to earn money
  • We are not playing money, we are working
  • Money has always in impact in human mind
  • Take some relax time oustide of trading
  • If needed, take a long break
  • Try to not think about trading
  • Being addict when necessary is a good thing to compete
  • Losing and failing is natural in trading
  • Respect his Money management strictly

FEAR OF FAILURE

  • Try to love working on what we do
  • Fear have to be a pleasure but canalyzed
  • Passion mean sacrifices and taking risks
  • Results should not have influence in our mind, but the process
  • Love to sing instead of becoming rich and famous
  • Don’t do anything is also a decision making

In trading, we need to plan a strategy and follow it with discipline. But it is not enough to success. We must also focus on our emotions. This is the difference between a winner trader and a looser trader. If we are at least aware of our different emotions, so we can easily find our weaknesses. Emotions described above need to be controlled or known by the trader.

 

Vicky TSANG

 

BONDS & SHARES

BONDS & SHARES is a participatory non-Profit information platform for, through and by experts in finance and business. For more information please visit www.bonds-and-shares.com


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