Overcoming Emotions When Trading
Knowing how to control your emotions while trading can prove the difference between successful and unsuccessful trading. Emotional states have a significant impact on the decisions a trader makes, especially if the trader is new to trading, and maintaining a calm demeanor is important for consistent trading.
Many consider one of the common mistakes that novice traders make is trading filled with emotions. Both negative and positive emotions are all interconnected in forex trading. If not controlled, emotions can adversely affect the next trading plan. The two emotions most traders experience are fear and greed. Traders who are afraid to lose will actually lose more, because they do not dare to cut losses and continue to hope that price movements will reverse direction. However, if it turns out that the price continues to decline, of course the losses will be greater. Therefore it is necessary to understand the emotion management system.
Emotions play a huge role in trading results. The inability to control and regulate emotions can be fatal because a person's emotions tend to change. A system is needed to regulate and control it. The emotion management system is one of the three main pillars of the trading plan, in addition to the trading system and money management system. The regulation and control of emotions is a sub-system that traders must plan. The main plan is to be able to suppress as much as possible the destructive emotions that can make the trader deviate from the system, and strengthen the beneficial emotions that can keep the trader sticking to the system.
Destructive Emotions
The most powerful and dangerous destructive emotion is the fear of losing money. This fear stems from a hard-wired realization that the trader's struggle is limited and is a very valuable commodity. It is undeniable that almost everyone considers money as a symbol of life and independence.
Favorable Emotions
Always believing in the traditional system and money management system used is a very profitable emotion. Traders will always follow the system so that the execution of trades that traders do is truly accurate according to the system rules that have been created. It is these emotions that traders should practice before actually plunging into the real market.
On the other hand, lack of trust in the trading system will cause the execution of traders to always deviate from the system rules, so that in the end it will affect the emotional stability of traders.
Emotion Management Method
In order to amplify favorable emotions, traders must reprogram the trader's subconscious mind to always stick to the trading system that the trader has created. One way is to instill orientation in the trading system, not on the trading position.
It doesn't matter whether the current price movement is about to break high or break low, if the trader's trading system does not show a buy or sell signal, then the trader should not react. In addition, always instill that the trading system and money management system that traders use will result in long-term results overcoming emotions when trading.
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