How to Control Bad Emotions that Affect Trading It can be extremely difficult to perform well in trading if you’re constantly bugged by your nagging emotions. True, it’s not easy to focus when you’re too excited or too worried about news or anything to that effect. It is also equally difficult to trade if you have no idea how these emotions affect your trades. Here’s a short guide on how to control bad emotions that affect trading. Check them out. You may never know when that bothersome anxiety will attack.
First Tip: Learn Something New Many people generally agree that when you’re oversaturated with something, you get tired and fed up of it. In spite of the constant challenge that trading poses, it still gets boring sometimes. Either you know too well what you’re doing, or you have no idea about what’s happening so you just feel bored by it. To offset this kind of emotion, you got to continually learn something new about trading. You may want to learn more about Iron Condors, or become a master of Credit Spreads. Perhaps you even want to be an expert when it comes to RSI and MACD indicators. Or, you want to understand the dos and don’ts of different asset classes. Maybe you’re curious about how oscillators help investors like you. Well, get up and stop daydreaming about these things and allot a time to learn them. Of course, you don’t need to learn all of them in one sitting. Take your time and indulge. You’ll feel rewarded.
Second Tip: Perform Market Research Aside from the technicalities and various terms to learn, maybe you’re also curious about what’s happening right now in the market. Actually, this is a must. Don’t be lazy and depend too much on the speculations and talks of other investors. You ought to formulate your own judgment, which will help you in the longer run. How? Remember that investor sentiment heavily influences the market, and you cannot just go with the flow all the time. Your market research counts.
Third Tip: Try Paper Trading Paper trading can offer a lot of insights when you’re totally at the end of your wits. This is another emotion that goes against trading. When you feel like you are out of options, but you want to try out possibilities, paper trading is the most convenient way to test those possibilities. In fact, many professional investors still do this and it usually gives them ample amount of additional wisdom when it comes to the market movement.
Fourth Tip: Write A Trading Plan If you still don’t have one, you got to write it down right now. Don’t ever fall for the belief that you sometimes can play trading by ear. It is a most perilous gesture. Once you have written down your plan, you got to make sure that you update it monthly, or as often as necessary. There will always be something on it that you can improve. Plan carefully, because when you write a trading plan, you’re practically planning your success steps.
Bottom Line Controlling your emotions is never easy. Sometimes, it feels like grabbing a slick and slippery fish with one hand. But that doesn’t mean it’s impossible. Investing legends also have to struggle with this every time they make big investment decisions, so it’s okay to admit it’s difficult. Still, the bottom line is: you have to do something and control these emotions that go against trading.
Published on Mar 8, 2018
Published on Mar 8, 2018
It can be extremely difficult to perform well in trading if you’re constantly bugged by your nagging emotions. True, it’s not easy to focus...