3 signs of emotional Trading

Emotions play most important part in our lives and obviously they affect each and every section of our life, be it our personal or professional life, going against the classical theory of keeping your personal and professional lives separate, science has proved it many times that you cannot divide your life in two parts.
1. I like to follow or copy trades of my IB/senior trader. 
Very often we see that traders simply start following some senior traders or there IBs, instead every trader should analyze where the market is moving, a trader should be aware of what is going to happen next in the market, the best chess players across the globe, they are generally 5 steps ahead of their opponent and here your opponent is market, so instead of following some another person, every trader should read the technical analysis, fundamental analysis , market news and only then he should trade.

2. Are you counting profits before trade is completed?
A lot of traders check their profits and losses every single hour and they start feeling very happy when the trade is going in their direction and if the trade is going against them they assume that this is a temporary phenomenon. BIG MISTAKE. 
Psychologically traders should think opposite that if a loss has happened, a trader should understand that this was a real loss which and at the same time, if the trade is showing in profit, it is not realized until unless you close the deal. This mentality puts the trader in the right state of mind.
If you are thinking that a loosing trade would turn around and convert in profit then you are just fooling your mind by emotions, trust your technical indicators and your knowledge about market more than your emotions, if the charts and patterns indicate that you should close the deal then please close the deal.
If you are in profits and you think "oh wow I am an Awesome trader", at this moment you are flying in your emotions again. In this state you will ignore the charts and patterns even if they are saying that you should close the trade and exit the market, you would not listen to that, the best advice for this state is that DO NOT trade for next 2 to 3 days after making huge profits.
TRADING REQUIRES super heated logical analysis not burning emotions, if you stop trading for next 2 to 3 days, you would feel much balanced and you will see that your trades are balanced and you have consistency in trading.
3. Trading is my Hobby.
If you are trading just for the sake of a hobby, then you are set emotionally to loose, TREAT IT LIKE YOUR BUSINESS, maintain records and journals of every trade, every transaction , study the techniques which you were using in past , analyze your mistakes and improve.
Remember one rule: If you would stop Improving, market would throw you out.
Secondly take an office or a quite place which is well organized and where all your data is at one place, and which is far away from distraction, when you do all this, your emotional levels would change completely.

No comments:

Post a Comment