Our emotions accompany us throughout life and are considered a typical characteristic of a human being. However, it is useful to know how to control these emotions, and not just when trading. Do not expect any general advices in this article, but rather specific tips on how to fight and control your emotions. You will even get to know the specific way of dealing with emotions that we use ourselves.
You must acknowledge your emotions
Personally, I am not that interested in my emotions. I repress them in public and I am not interested in them in my free time at home. However, when I was thinking about those many times I had failed, I realized that it was my emotions that could have been behind everything.
And just acknowledging your emotions is the first step towards to success. If something went wrong in your trading, think about it: Why did it happen? Was it really ignorance, or was it anger, aggression, fear or nervousness?
You might be happy about some super-good trade you’ve made and risk an unnecessary amount of money on the next trade, and then you may want to push the stop loss. This should never happen, as trading should be consistent. It is therefore important to realize why you have done so.
Diary – Record your emotions
Have you gotten into a fight with your family? Are you afraid to attend a work meeting or talking with your supervisor? Are you aggressive when driving or when trading? If so, find a way to record it. Personally, I started to write down my emotions into a little notebook, but later I switched to an online solution so that I could take notes at any time – after all, I have my phone with me at all times, so it’s no problem for me to record my experiences regardless of where I am, for example, “I got angry because of a slow driving car.” In other words, it allows me to record everything I need.
I believe it is important to record these emotions as soon as possible after they appear, so they are expressed as faithfully as possible.
I analyze these records in the evenings, sometimes just once a week, and then I write a commentary – about what should I do next time so that my emotions do not get hold of me. Emotions are just emotions and it is always better to analyze them in hindsight when you’re thinking as rationally as possible.
TIP: Record the emotions you are experiencing when trading. Why did you close the store before you originally planned to? Was it because of your fear that the trend would reverse, or because the trade responded to an important price level? What is the best way to prepare for the next trade?
Fortune favors the prepared
You can never eliminate emotions completely, but you can learn how to handle them. If you can prepare for something, do it. The above-mentioned emotions diary should help (whether a notebook or a phone).
I myself was once afraid of talking with my clients in English. I spoke the language, but there was this little voice in the back of my head telling me: what if you don’t understand them? I have then recorded this fear. During my first call, I was sweating through my t-shirt, but in the evening I realized I have done everything the way I wanted. So, I noted “fear was unnecessary,” in bold. Of course, I was still nervous during the following calls, but always less and less. And now? It is nothing but a memory. Still, I have other emotions that I’m learning to eliminate.
If you evaluate the situation, you can prepare for it and next time it will play out better for you. If not, record everything and evaluate it again.
How to handle an attack of acute emotions
This is something that has definitely happened to everyone. Emotion attacks can come often, but they can also be very rare. Sometimes you will experience failure and you need to face it. What to do in this situation? Well, every situation is different.
I myself have experienced these attacks during my driving license exam, graduation exams, college exams, degree examinations, various tests, job interviews, conversations in English, presentations, unpleasant conversations and much more. What helped me most in these situations was just simply taking them easy.
So, what is it all about? Is it about life? Will the world stop if I don’t succeed? No, it won’t stop, and you will be sad, but there will come another opportunity, not to mention there are things that are far more important in life, like health, family, and so on. Sure, sometimes people can face a really tough time because of some family of health issues, and in these cases, only time can help, but when it comes to interviewing with your boss or meeting with a client, why by nervous? There is no reason to be, all you can do is prepare and see how the situation plays out. You will be ready, and there is not much more you can do.
Emotions and trading
Above, we applied emotions to everyday life, but it is the same case with trading. Record your emotions and learn from them. If you know that something in the near future will make you emotionally unstable (and it doesn’t have to be trading), I would consider not trading on that day. You won’t be fully prepared!
Personally, I am no psychologist and I am not a fan of similar psychological advice, but I hope that the tips above will help you. The did help me, and my emotional diary is my great life assistant.
Article Source: https://xbinop.com/how-to-handle-your-emotions-not-just-in-trading/
Showing posts with label financial decisions. Show all posts
Showing posts with label financial decisions. Show all posts
FIVE DONT'S OF TRADING - KEEP THESE THINGS AWAY
Here is a collection of 5 ‘Don’ts’ you, as a trader, should try to avoid. These tips can help both novice and experienced traders protect their funds and improve results.
1) Don’t spend everything you earn
Most people make a living, spend money on leisure and only then put aside the rest. Unfortunately, this way of accumulating funds is sub-optimal when working towards a particular financial goal. What you can try doing instead is save first, invest second and only then spend the rest. Remember not to get too greedy though, leave yourself enough money to enjoy your life. Creating a savings account and accumulating funds there on a regular basis can be a good option.
2) Don’t underestimate the emergency savings
A lot of people keep a relatively small amount of money aside for “emergency money.” This may help you with a last-minute plane ticket, but it won’t help much if you get sick or something comes up unexpectedly and ruins your plans.
It would be great if you could accumulate 6 months’ worth of your wage in your emergency savings and only use these funds for real emergencies. When your income or expenses change, make sure to increase your savings amount accordingly.
3) Don’t miss an opportunity to earn more
Remember not to stop after securing a well-paying job. There are always ways to improve yourself and your financial well-being, whether it is by the means of professional development, passive income accumulation or something else. An investment in yourself is one of the best investments you can ever make. Therefore, you should strive to acquire new skills and knowledge whenever you get a chance, especially when those are available for free.
People who challenge the status quo are also the ones who are more likely to be interested in the financial markets. They understand the risks involved, but by investing regularly, over time, they recognize the opportunity for long-term growth.
4) Don’t make emotional financial decisions
Instead of randomly buying and selling assets based on the so-called gut feeling, develop a comprehensive trading system and create a trading plan with long-term goals.
As you probably already know, it’s not always easy to keep your emotions in check. And that is exactly why it is so important to have a decent strategy that prevents irrational trading. Put simply, a trading strategy is a set of rules for when it’s safe (in your opinion) to open a particular deal.
5) Don’t put all your eggs in one basket
Different asset classes behave differently and grow/depreciate at a different rate. It is true that by diversifying your portfolio you can miss a good chunk of profit when times are good. However, when times are bad, a diversified portfolio carries lower risk. Wealth that comes from several sources is usually more stable and reliable than one that relies on one resource.
Article Source: https://blog.iqoption.com/en/five-donts/
1) Don’t spend everything you earn
Most people make a living, spend money on leisure and only then put aside the rest. Unfortunately, this way of accumulating funds is sub-optimal when working towards a particular financial goal. What you can try doing instead is save first, invest second and only then spend the rest. Remember not to get too greedy though, leave yourself enough money to enjoy your life. Creating a savings account and accumulating funds there on a regular basis can be a good option.
2) Don’t underestimate the emergency savings
A lot of people keep a relatively small amount of money aside for “emergency money.” This may help you with a last-minute plane ticket, but it won’t help much if you get sick or something comes up unexpectedly and ruins your plans.
It would be great if you could accumulate 6 months’ worth of your wage in your emergency savings and only use these funds for real emergencies. When your income or expenses change, make sure to increase your savings amount accordingly.
3) Don’t miss an opportunity to earn more
Remember not to stop after securing a well-paying job. There are always ways to improve yourself and your financial well-being, whether it is by the means of professional development, passive income accumulation or something else. An investment in yourself is one of the best investments you can ever make. Therefore, you should strive to acquire new skills and knowledge whenever you get a chance, especially when those are available for free.
People who challenge the status quo are also the ones who are more likely to be interested in the financial markets. They understand the risks involved, but by investing regularly, over time, they recognize the opportunity for long-term growth.
4) Don’t make emotional financial decisions
Instead of randomly buying and selling assets based on the so-called gut feeling, develop a comprehensive trading system and create a trading plan with long-term goals.
As you probably already know, it’s not always easy to keep your emotions in check. And that is exactly why it is so important to have a decent strategy that prevents irrational trading. Put simply, a trading strategy is a set of rules for when it’s safe (in your opinion) to open a particular deal.
5) Don’t put all your eggs in one basket
Different asset classes behave differently and grow/depreciate at a different rate. It is true that by diversifying your portfolio you can miss a good chunk of profit when times are good. However, when times are bad, a diversified portfolio carries lower risk. Wealth that comes from several sources is usually more stable and reliable than one that relies on one resource.
Article Source: https://blog.iqoption.com/en/five-donts/
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