(Last update 10-25-2016)
As many traders have already proven, your emotions can significantly affect the outcome of your trades. Letting your emotions control your trading decisions can negatively affect how your trades will turn out, and it might even lead to the unfortunate end of your trading journey.
To be successful in trading, you should learn not to let emotions influence your trading decisions. Failing to control one’s emotions in trading is often the biggest reason why most novice traders fail in trading.
Fortunately, there are some things you can do to make your emotions less involved in your trades. Here are some of them:
Set Stops & Limits Based On Your Analysis of the Trade, Then Leave
Do not attempt to adjust your stops and limits once you’ve initially set them, especially if you have already placed your trade. Stick to your trading plan. Trust your analysis and know that there are only two possible outcomes – it’s either you win or lose the trade. Trying to adjust your stops and limits might only ruin your trades. Plus, you should not worry that you’ll lose more than what you can afford. As long as you’re following a good risk management plan, you’re all set.
Accept The Fact That Not Every Trade is a Winning Trade
Be true to yourself and set realistic expectations. Be aware of the fact that you will not win all your trades, and you will also experience some losing trades. Most budding and inexperienced traders are having a hard time accepting this fact, which is another reason why they lose and fail. And because they’re having trouble handling losing trade, it often pushes them to do revenge trading and over trading. Such negative trading behaviors often leads to even more losses. According to one of the leading forex brokers, MXTrade, it doesn’t really matter how many trades you lost, but how much profit did you gain over the course of your forex trading journey.
Avoid Looking at Your Profit and Loss While Trading
There is nothing else that can immediately trigger a great surge of emotions than looking at your profit and loss figure. Most traders treat their profit and loss figure as a measure of their self worth. But you must refrain from doing it, as it won’t do you any good. You should remember: you’re worth more than your profit and loss figure.
If you’re already following a solid trading plan and have set strict stops and limits, then you don’t have to worry about having severe and unwanted losses. Therefore, there is no need to check your profit and loss figure on a regular basis. It will not do you any good, and it would just negatively affect your attitude and behavior in trading. Similar to what Trade12 have mentioned, you should not let your emotions define your trading strategy.
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