Tips To Help Control Your Emotions When Trading

The Fear Of Missing Out (FOMO)

Here’s the scenario: you’ve been sitting on the sidelines while watching the market rally . Are you itching to jump in and buy? Are you frustrated because you are missing profits that others are making?

Many traders I’ve been talking to feel this way right now and it’s not uncommon. We have all watched the market rally much further than anyone expected. And, it’s not just the swing trader who feels this way. Day traders are feeling the heat as a trending market offers little entry opportunity.

 Even though it may be hard, sitting on your hands can be one of the most difficult things a trader NEEDS to learn. If fact, I really do feel like it’s a requirement for a successful trade – one lesson I learned quickly during my first few weeks trading at home. We have to treat trading like a business not a hobby – and sometimes waiting for the right entry is part of the business.

Treat Trading Like A Business

Most of my students confessed, They  blindly waking up each day and trading with no real direction – Basically they treat trading as a Gambling Den, Waiting for their luck to shine.

What helped them get over the hump was to treat trading like my own personal business. They wrote a business plan, had specific achievable goals, and daily activities to keep my emotions out of the way. What this helped them do was to remove emotions from the traditional Fear and Greed cycle.

The trader who can remove themselves from this cycle and treat it like a business is much less likely to force trades out of boredom or because he/she feels an internal pressure to be productive.

Let’s Control Those Emotions Shall We

Productivity can be extremely helpful when starting to trade. If you are bored then you are more likely to make stupid trades. If you are business searching, analyzing, reading, etc then you are more likely to find amazing trades with great risk/reward.

Here are  practical tips to help you learn to be productive and control your emotions:

1. Learn and Back test Robust system

2. Perform Some In-Depth Market Research. You have to be curious about something that’s happening in the market right now right? Down times in the market can be great opportunities to do some intense market research.

3. Paper Trade Until You Fall Over.

4. Write A Trading/Business Plan. If you don’t have one you need one and if you have one you need to revise it monthly. These can always be improved. Take a section of your plan and think carefully about how you can improve it, and then do it already!

5. Analyze 5 Completely New Charts. Pick out stocks  you’d like to trade and analyze the charts carefully, making a list of the bullish and bearish reasons to trade it. This will help you think carefully about the trade and remove your emotions completely after making the list.

How Can You Add To This?

You can never control the market and you can never control how any given trade will turn out. But, you can learn to control your actions and emotions with a solid trading plan and by keeping yourself productive.