Managing your emotions is a skill you need to master
Top three emotions you definitely need to learn how to manage: greed, fear, excitement
Your ability to control your reactions while trading will make the difference between your success and failure. Your mental stability has a significant role on the decision you make, particularly if you are a beginner and keeping yourself cool is mandatory for a profitable trading experience. We will give here some pointers on how to trade without emotions included. Traders sometimes think that a good trading strategy and powerful risk management tools would save their capital and help maximise the profits. If you are one of these traders, think again! Among the most important keys of success is emotional intelligence. Defined as the ability of someone to understand and manage their emotions, your emotional intelligence will give a strong support and guide you to act properly in the moments of sharp changes.
The question is if you should listen to your head or emotions. The point is that emotional reaction is a natural response. You need to put this reaction down and put your logic into work first. As anyone knows, the root of our decision-making lies in our childhood, and not always the directions are healthy. A reaction which comes out of the emotions does not lead to success at all. Taking risks and learning to let go are 2 crucial steps to become a strong player in the financial market. Losing trades is of course a very unpleasant feeling which triggers fear, frustration and greed. There are four types of fear you need to have under control: fear of missing out, fear of loss, fear of being wrong and fear of letting a win turn to a loss.
Greed’s role in trading
The opposite of fear is being confident. And you do need confidence while trading online. How can you boost your confidence? By learning. Only learning and practice will boost your confidence. But be careful, overconfidence will play a trick on your strategies, because you will take actions without analysing the market and prices. Here let’s mention two functions, stop loss and take profits, which are able to control enthusiasm and greed and reduce losses.
Let’s see 5 ways to be more in control of the way you feel while trading. First, create personal rules – create personal rules. Set some rules you will follow when you trade, so you will have a guide how to deal with your emotions while trading. Your rules should be about risk tolerance, entering and exiting levels, stop losses. Secondly, trade when it is suitable to do so. Stay away from the turbulent market conditions. When it is stranger than usually, stay calm and observe. Third, lower trade’s size. Reducing the amount of capital you will invest in each trade will reduce your stress and emotional bagages. Fourth, create a trading plan and a trading journal. Fifth, relax and enjoy trading.
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