Emotions are very important in determining our trading results. The inability to control and regulate emotions can be fatal because it tends to change. You need a right system to regulate and control it.
According to Investopedia, you have to muffle the emotions that are very likely to make you get out of the trading system and money management system.
Thus, what are the emotions that you usually experience when trading?
Destructive emotions
The most powerful and dangerous destructive emotions are the fear of losing money. This fear comes from the programmed awareness that you have limited money. It is undeniable that almost everyone considers money as a symbol of life and independence.
The association is mentally so strong that we tend to have automatic mechanisms to endure protect very valuable commodity. This fear causes the trader to close a position prematurely. Additionally, it can reduce the position size that should be recommended by money management system, for fear of loss. Usually, this happens after losing streaks.
To overcome these two types of destructive emotions, you should:
Knowing that both types of emotions do exist in you. Thus, you can anticipate each time one of the surfaces. You have to know that market price movements are randomly distributed.
So, you can never be sure which trades will be profitable and which will be lost. You myst believe that the trading system and money management system that you are using is the best. If you don’t adhere to the system, you don’t trust yourself. If you lose confidence, you should stop trading until your confidence returns.
Read more : 3 Types of Stop Loss to Minimize Your Trading Risks
