Four Ways to Manage Your Emotions While Trading

Hello to all of my readers!

I hope the past week was kind to you.

As I reflected on my one-year trading journey, I realized how important emotions were in my decision-making process.

The euphoria I felt when my targets were met, or the despondency I felt when I lost, was overwhelming to my psyche.

I knew right away that this was not the way I should be managing my emotions if I wanted to do this for the long haul.

After some thought, I was able to identify some methods for gaining control of my emotions and keeping my head above water when I suffered a loss.

I’m going to share with you four thinking approaches that have helped me and that you might find useful.

1. Keeping Expectations in Check

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I had a psychological bias in the early months of my trading that if I took a position in a trade, it would be profitable since I had spent time identifying a great set-up and planned my entry and exits.

Didn’t it have to?

Well, little did I know at the time that trading isn’t like that.

 In short, trading and certainty do not go together.

I gradually came to understand that, like any other business, losses would be a part of the journey.

Consider the grocery shop in your neighborhood, for example. Do you believe that the grocery store makes profits in equal amounts every month?

It most definitely doesn’t.

Because the other variables for a grocery shop must remain constant to produce equal and meaty profits.

Let’s say the grocery store makes a decent monthly profit on average, but what happens when a new store opens nearby that provides products at attractively discounted prices?

The first grocery store will see a significant drop in footfall at this period, resulting in a few months of drawdown.

So, what do you think the grocery owner will do?

Do you imagine he’ll close the store, reshuffle his business, and start selling designer jewels instead?

Not at all!

To keep his business functioning, the owner of the first grocery store would have put in a lot of money and learned a lot of hard skills.

He would have foreseen that competing forces will impact negatively on the future.

During this time, he would be able to properly differentiate his services to outlast the competition in the long run.

Trading can be compared to the same analogy.

The lesson we can learn from this example is that as traders, we must be prepared for any unfavorable event that could result in a loss.

We have a lot of external factors in trading that we can’t control that can cause prices to go in the other way of our expectations.

As a result, every time we take a new position, we must understand that some external occurrences, no matter how powerful, perfect, or rule-based our analysis was, could result in trading losses.

Trading is compared to any other business, and properly so.

Because businesses don’t close after modest losses, and your trade shouldn’t either, because that’s how businesses work on Earth!

2. Risks that are Planned and Calculated Help to Reduce Anxiety

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In this merciless profession of probabilities, calculating the risk in advance is how you bring in a semblance of certainty.

When you know how much money you’re going to lose, it won’t come as a shock.

Position sizing, which includes risk management, is an important part of trade planning.

When losses occur in an amount with which you are neither familiar nor prepared, your confidence is shaken, and you begin to resent trading.

You’ll start referring to it as gambling.

Furthermore, and maybe more importantly, unmanaged risks deplete your capital.

When something unexpected happens, our anxiety level rises.

Anxiety cannot be eliminated, but it can be controlled.

It becomes an aspect of the expectation once you’ve specified your risk for the trade.

When you manage your anxiety, you improve your capacity to make decisions, which is critical for a good trader.

3. Mastering the Art of Trading will Take Time

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In the second month of my trade, I had the following thoughts:

I took a few courses and even read a few excellent books.

I began to trade.

Wow, for a week, I made incredible profits.

Why does everyone bring up the subject of risk? That’s nonsense.

Let us fast forward a few days:

*I’ve blown away my entire capital*


I had no idea my entire account had been wiped because I hadn’t established a stop-loss in intraday trading!

Now I’m thinking:

In retrospect, I understand that despite reading books and completing courses, I was still ineffective at identifying important levels and interpreting charts in a meaningful manner.

After a year, I can identify key levels, perform multiple time-frame analyses, and know that developing an edge takes time.

Interestingly, I have the notion that there is still a lot more to learn.

in a nutshell, never expect to become the next Mark Minervini as soon as you begin trading.

I believe that to develop as a great trader, you must not only work on a strategy that is comfortable for you but also mature your mindset.

It is not an overnight activity because it takes time to develop a new trader’s mindset.

You must bear in mind that you will be losing money in the beginning, so do your best to limit it to a minimum.

Always keep in mind that money follows a strong process.

Money will follow after you have a system with a good win rate and the ability to accurately identify entries and exits.

Consistent success in trading is the outcome of a good system, not the other way around.

Start concentrating on honing your edge and see how it develops.

Learn to be comfortable with hardships and embrace the struggle.

4. Stop comparing your P&L to Those of Others on Social Media

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If you’ve ever found yourself evaluating your trading performance by comparing your P&L to others’ who post theirs on social media, know that you’re not alone.

Many of us have done it, and it has made us feel quite insecure to see so many traders generating huge profits while we are stuck in a drawdown.

To begin, you must remember that not everyone is trading with the same amount of money as you are.

As a result, their drawdowns and profits will be proportional to their capital and risk appetite, depending on the size of their account.

Trading success isn’t measured by comparing your profit and loss to that of others.

If you want to see if you’re becoming better, compare your current process to the one you previously used.

Do you think you’re doing a better job of controlling your risk?

Are you consistently adhering to the rules?

Do you have a stronger grip on your emotions than you did before?

How does losing a trade make you feel today versus how it made you feel previously?

The best approach to assess your trading progress is to ask yourself these questions.

Money is the final product of the trading process, as I previously stated in this post.

There is no other method to improve the result except to work on improving your process and trade plan.

If you’re a novice, I’d advise you to avoid following accounts on social media that routinely post their profits.

Do give heed to accounts that discuss trading approaches and psychology.

Follow people who inspire you to better your trading process and add value.

It’s sad to see how many individuals are fooled by catfish accounts on social media, which boast of unnatural profit daily.

Keep in mind that there is a lot of sophisticated software out there that can manipulate P&L data.

As a result, I strongly advise you to stop engaging with such accounts and instead follow fantastic people that offer value to your life.

I hope that by sharing my ways of dealing with emotions in this post, you will be better equipped to handle your own.

After all, your mental well-being will influence your actions.

Please feel free to leave a comment if you have any advice on how you have dealt with unpleasant feelings during your trading experience; I’d love to hear about them.

Until next time.

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