Eliminating Emotions in Your Trading – The Key to Long Term Success

September 11, 2020

Mindset Matters

Emotions run wild when trading there’s no denying that. For many traders wins can make them feel invincible which then births a cocky & greedy mindset. On the other hand losses can cause anger, frustration & depression and a feeling of unworthiness. The problem is that both negative & positive emotions can have a detrimental effect on performance. Emotions drive in-the-moment decision making no matter how stupid or irrational those decisions may actually be, resulting in the breach of processes where plans are ignored/strayed from. Straying from plans is a surefire way to lose which is why it is so so important to get your emotions under control FAST. Until you do you will not win.

Trade Like a Robot

Successful traders are those who have learned to trade like a robot, free of emotion and strictly in-line with their plans. Unsuccessful traders are much more emotionally driven and fail to stick to the processes they have laid out – if they even have a plan.

Which one sounds more like you?

If you’re not yet a successful trader then take a moment to think about the power of emotions and the grasp they hold over your trading. Do you make emotion-driven decisions? What effect do they play upon results? The effect of emotion-driven decisions are almost always negative – all it takes is one revenge trade or one oversized position as the result of cockiness to blow a week/month/year worth of progress.

To succeed you must trade without conviction. Your biggest task if you are a trader who’s finding it hard to succeed is clearing your mind of emotion and gaining control over your mindset. No more cutting winners early, no more extending losses in hope of reversal, no more oversizing positions and certainly no more revenge trading. You need to formulate a clearly defined plan and then stick with it! Your plan is smarter than your emotions – trust me.

Mind Work Takes Experience

To overcome emotions you must actually face them in real-life scenarios which is the hardest part of pushing through the mental barrier. Emotions are wired in our brains so we could talk about the need to overcome them all day but when you sit back down at a chart chances are you’re going to feel the same strong anger, greed, frustration that you always feel when a trade wins or loses – you have to really take a beating before your mind rewires for the better. You WILL face hardship and you will most likely make a few costly mistakes before you drop your emotions and let your plan take the lead, so be prepared for some difficulty if emotions are not yet something you have mastered.

Here are a few tips to remember that will help you gain the upper hand on your emotions while pushing through this mental barrier:

Never Break Your R/R Strategy

This is arguably the greatest way to turn unsuccessful trading around in my opinion. If you adopt a risk vs reward approach to your trading your confidence will improve tenfold knowing that losses are no longer a big issue. As long as you can stick to your plan consistently success WILL come for those using good RR strategies.

To learn more about Risk vs Reward & how to adopt it click here.

Accept Every Loss

Losses are normal and should be accepted as a part of the overall trading process. If you follow a risk/reward strategy you will in-time learn to accept every loss without negativity. Here’s a brilliant quote from a massively successful trader to put your losses into perspective:

“In this business if you’re good you’re right 6 times out of 10. You’re never going to be right 9 times out of 10.”

– Peter Lynch

Stay Grounded When You’re Winning

Wins can make you feel like the best trader in the world, while that doesn’t sound like a bad way to feel it’s actually going to knock your performance in the market. Cockiness leads to greediness and both of these traits lead to emotion-led decision making. AVOID! Best practise is to develop a short-memory. Whether you win or you lose let go of it! Look forward at the next opportunities with a calm & clear mind.

Need Help With Your Mindset?

If you need further help and advice on eliminating emotions & creating a clear headspace for your trading feel free to message or email me to book in a private 1-2-1 call.

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