How to Control Emotions While Trading?

Trading | 6 months ago


How to Control Emotions While Trading? - tradeglobalmarket

Our emotions have a significant impact on the decisions we make. Trading is all about making decisions of what to buy, what to sell and what to hold. Most traders have a hard time controlling their emotions. Many of them have even blown up their trading account because of lack of control on emotions.

In this article we will discuss about how to control emotions while trading. Also, we will mention the exact actions to take when you think you are unable to control your emotions.

 

1. SET YOUR RULES AND FOLLOW THEM RELIGIOUSLY

A trader needs to create their own trading rules. The rules must include risk reward set up for when to enter a trade and when to exit the trade. This setup will take care of profit target and stop loss automatically and therefore it will take emotion out of the trading.

 

2. WAIT FOR A CANDLE TO CLOSE

A trader must not catch a candle which is still open. An open candle provides misleading signals which will leave you in a mess. Do not let your emotions drive your decisions while trading. Many times, these misleading signals are the reason for losing trades.

 

3. STOP TRADING AFTER TWO CONSECUTIVE LOSSES OR WINS

A trader starts feeling like a loser after two consecutive losses. Since they don't want to lose, they start doing revenge trading. Similarly, a trader feels invincible after two consecutive wins. They think today they cannot lose at all and they start taking some fast and bad decisions without proper analysis. So, a trader should stop trading after two consecutive losses or wins to control their emotions.

 

4. NEVER USE THE MONEY THAT YOU NEED, USE ONLY DISPOSABLE INCOME FOR TRADING WHICH YOU CAN AFFORD TO LOSE.

If a trader is using the money which they need the most for some other purpose, then it amplifies their emotions while trading. This is because, the fear of losing that needy money will make the trader lose some good opportunities in the market.

With these four mentioned tricks a trader will be able to keep a check on their emotions. Remember that controlling emotions needs persistence. It will take some time to realize that you are benefiting from controlling your emotions while trading.


 

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