In trading, your winning moments can ironically work against you, it might be the most dangerous time to trade. You tend to generate false confidence within you that often leads to delusional decisions.
To make things clear, losing trades cannot be avoided. But what we want to emphasize here are the losses that you can actually avoid – losses that come from emotions. These things happen right inside of you which you are not aware of.
Dangerous Trading Time: Right After A Win
It might sound a little ironic to know that after winning can be the most dangerous time to trade. But this fact is backed by a scientific basis that we need to understand.
There’s a high feeling after winning a trade. It just feels good. Dopamine releases good chemicals in your brain when something happens that makes you happy. It’s a natural occurrence, but what makes it dangerous is when you become addicted to that feeling.
When you crave for more feel-good feelings, you tend to push yourself to disastrous trading decisions. This craving manifests when you, after winning, are more likely to over trade. You are more prone to making stupid decisions because your brain perceives less risk when there’s a high level of dopamine. Your logic falls down, and you make it work in contrast to your trading strategy.
Your brain seems to have a mind of its own as it prevents that high feeling from going low. The dopamine rushes in your brain.
The act of entering a trade that has previously made you money will release more dopamine in your brain. This could lead to losing streaks and account depletion.
Whether you win or lose, the brain will get what it wants – a high dose of dopamine. And you need to be aware of this.
Dopamine is not really bad. But it’s like a double-edged sword; it can either be your friend or your enemy. It can make you adapt to either good habits or bad habits.
