When it comes to trading, many traders often wonder, “How can I effectively control emotions when trading?” We understand that emotions can significantly impact trading success. In this article, we’ll explore seven proven tips to help you achieve emotion-free trading.
Key Strategies to Control Emotions When Trading
Emotions sometimes lead us to make decisions for the wrong reasons. For instance, we might buy a stock, convinced it will definitely rise, and when it doesn’t, we hold onto it out of pride, finding it hard to admit we were wrong. There are many similar examples.
So, the key to successful and stress-free trading lies in emotional control. Traders often grapple with four emotions: hope, greed, fear, and regret. Suppressing these emotions is essential for satisfaction and success. After extensive research, I’ve concluded that the surefire way to control emotions is by making the trading process more mechanical. By “mechanical,” I don’t just mean relying on tools or software, but about making your trading actions systematic.
Proven Tips to Achieve Emotional Control
The seven suggestions I’m outlining here can greatly assist you. Follow them to keep your emotions in check while trading, and witness the results for yourself.
1. Take a 5-Second Pause
Before making your next trade, pause for a few seconds and consider whether it’s the right decision. Look at your chart objectively and think about what a professional would do in that situation. This short pause can sometimes make all the difference.
2. Wait for a Full Candle
Sometimes, early entries and misleading signals can leave traders in a mess. So, wait for a full candle before making any decisions. This approach may improve your performance as a trader. It might be challenging at first, but it’s a great way to understand how emotions influence your decisions.
3. Make Decisions Candle by Candle
Experience has shown that mid-candle decisions are often impulsive. It’s advisable, especially for new traders, to avoid making mid-candle decisions as they can significantly impact your results. While it might seem impractical, it holds true. When you try this method, you’ll see how impulsive trading decisions can affect you. Try making decisions one candle at a time to control your emotions while trading.
4. Create a Physical Checklist
Listing all your entry criteria can go a long way in preventing emotional decision-making. Write down your entry criteria in a checklist and keep it visible. This will help you maintain mental discipline.
5. Separate Charting from Trading
While relying on impartial charting tools when analyzing the market is wise, using a single charting tool for trading may lead to emotional mistakes. Why? When traders chart and trade on the same platform, they’re just a click away from entering a new trade. Orders constantly wait on the screen, creating a sense of urgency. Separating your trading from charting can help you control your emotions while trading.
6. Develop Long and Short Term Trade Plans
Don’t focus solely on one side of the market. This can fuel the urge to make emotional trades based on your opinions. Always create a trade plan in advance, incorporating both long and short-term strategies. This will help you control your emotions, whether the market looks bullish or bearish. Stick to your plan, despite the temptations the market may offer.
7. Trust Your Own Approach
In trading, as in any field, success is unlikely if you don’t trust your methods and stick to a consistent approach. Be clear and precise about your rules and trading strategy, then move forward with confidence. Sometimes, we abandon our proven rules when swayed by others’ opinions. Avoid this at all costs.
Opinions can be valuable, but only if you thoroughly research and understand all perspectives. Relying on opinions solely because they sound interesting is not logical. In trading, following others’ opinions can sometimes lead to disaster. To trade with confidence, avoid heeding others’ opinions.
I hope it’s now clear how you can effectively remove emotions from your trading. Give these tips a try and observe the difference for yourself. Share your experiences with us.