It may be believed that the most important thing for trading is to have knowledge.
Have knowledge, know the technique, know the markets and it turns out that is is very important in the trading world. that’s right, but there are somethings equal important.
They certainly have a great weight in the trader’s success; however, This falls apart if in a moment of crisis or tension you don’t know how to control the euphoria, greed, anger or sadness and feel that you lose control of emotions in trading.
Controlling emotions in trading isn’t very different for the new trader than the more experienced trader. For both are necessary to stop and start incorporating attitudes, steps, guidelines and indicators to help control emotions. Mainly to incorporate them as soon as possible.
Each person is different, therefore each process is also different. The truth is that if it becomes recurrent that you lose control of what you feel, it’s essential to stop and review this aspect. It’s important to discover what your body feels in each situation.
Would you like to know?: What does mean to be get success in trading?
There are some key premises to start this process to incorporate any data that applies to your particular case. Although it doesn’t look like it, trading is also a self-knowledge process and it’s essential to be able to control emotions in trading.
There are internal actions that depend on you and your discipline and other external actions that don’t depend on you. So the fundamental thing in a crisis moment to manage emotions begin with the following question:
This situation depends on me or not?
You have to take charge of what depends on you. Getting the responsibility that trading isn’t magic and a chance. So much of what you can manage happens in your internal actions.
1. Follow your Trading plan
It helps you take a step by step, have a strategy and risk and gives you the certainty you need to review when something goes wrong. Also Reconfigure and keep testing, increasing the risk, projecting or measuring it day by day based on the long-term goals. The structure offered by having a trading plan and following it, gives you that feeling of a “safe space” to go into when you’re overcome with anxiety or fear caused by emotions in trading.
2. Do backtesting
“Practice makes perfect”. Dedicating hours a day to test and practice, analyze won’t make you infallible but it’ll offer you experience that can feed your self-confidence. When in similar situations you observe trends studied in practice, you will have more tools to cement a decision when trading, remembering that every market moment is unique and unrepeatable. So this practice will help you if there are some situations, take you totally out of place. Strengthens the analysis and gives you security, counteracts the doubt, helps you practice, gives confidence less fear, experience.
3. Register what you feel, focus on you and what you feel.
Keep a diary of each day in which you record how you did. What did you feel physically when you got it right and when you missed, if you missed, why do you think you missed, and if you missed, why do you think you missed. If you succeeded, why do you think you succeeded? Beyond the technique, it’ll help to recognize what factors affect you to feel anxious or afraid. What signals your body sends, such as sweating, accelerated heartbeat, hyperactivity, pain in the pit of the stomach, tingling, among others. Only by recognizing and knowing them, you’ll be able to control them effectively. As these are signs of how your body processes and manages emotions.
4. Agree to the risk
Having clarity of the assumed risk, how much you’re willing to lose and the risk you project daily. It will help you to set limits, if you have an estimated daily risk, distributed in a number of operations, knowing how to stop in the number of operations or continue taking risks will depend largely on knowing how much you are exposing. How much more you can exceed and with what you are out of the plan, with the conscious consequences of each decision. This advice has part that depends on you and part that doesn’t depend on you, the market will do what it wants, the risk is always taken by you.
5. Know that everything is possible
This advice encompasses the biggest of the factors that do not depend on you and is that the market is influenced by so many variables that pretend to have control over them or not affect you is almost impossible, so the best advice we can give you is that you give yourself to trading, knowing that anything can happen, no matter how many projections and plans you have, you must prepare yourself from humility, resilience and compassion with yourself and your process, repeating this statement and internalize it, counteracts the impatience, anxiety and anger, promoting acceptance, flexibility and peace needed to face each day as a great opportunity to grow, while you develop and profitability.
Now, You know How important emotions are in trading. We invite you to put these five tips into practice. Let’s go!
Important: The information and/or knowledge expressed in this article shouldn’t be taken as investment recommendations or financial advice. All investments and/or actions involve a risk and each person is responsible for researching, educating and analyzing before making an investment decision.
