How to Control Your Emotions When You Trade

By | October 3, 2014

When we speak of “The Trader’s Mindset” what are we really talking about? Many of my studentsoften ask me this question and we talk about it a lot with traders I mentor.

When we trade the markets we approach the markets each and every day with a psychological mindset or set of beliefs and emotions. New traders often enter trading with beliefs about trading and the markets that simply do not apply to the realities of trading. This is why new traders get into trades and can’t get out or don’t know when to take profits or get out at the bottom and get in at the top of markets. In other words they make bad trades because they are trading from inaccurate beliefs and become subject to their emotions of fear and greed.

With proper education, experience and direction these traders can turn their trading around. Usually new traders realize after awhile of experiencing large losses or working very hard and still losing that they need to change. What they thought would work does not and they recognize that their emotions are working against them and not for them in trading.

Once they get to this point, traders either quit trading or seek help to overcome their trading handicaps. If you find yourself at this point, you need to seek help from someone who is a successful trader. The help you get or don’t get at this time will seal your fate as a trader. We teach you the importance of controlling yourself when trading. We call this developing “The Trader’s Mindset” to think as a trader should and not become subject to your negative emotions. In order to be successful in trading, you must not fall prey to the very emotions you are trying to exploit. In short term trading when we win, someone must lose. This is a hard cold fact of short term trading! And the successful traders usually are calm and very methodical in their trading and making money from other traders who react emotionally to market events and are therefore losing money.

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“The Trader’s Mindset” knows how emotions effect trading and learns how to deal or master their responses to their emotions as well as other trader’s emotions. So, how to we develop “The Trader’s Mindset”? To begin with use stops and stick with them! By using stops you are getting out of the market on your terms before your emotions have a chance to cause you problems by staying in the trade too long and then getting out because you can’t stand another dollar of loss – which for example is usually the point where you possibly should be getting ready to enter your next trade. The profitable trader usually can calmly follow the market where ever it goes thus exploiting those traders getting out of the market on emotions.

2 thoughts on “How to Control Your Emotions When You Trade

  1. Rajiv Jamwal

    Infact I am grappling with this problem and trying to steel myself off these emotive temperaments in tradings.
    Stoplosses when applied effectively save a trader a lot when the tide suddenly turns against him . And if a trader does just some basic calculation, it is not the lack of profits which does not swell his kitty but his inability to cut down on the losses resulting into his profits evaporating.

  2. vijay

    today’s blog is a detail reply of my problem which I narrated somtime back in the month of mid sept.14. In my town there is no succesful trader to whom I need to seek help from someone, neither I join your training classes from my location. But I have a strong belief of became a student of Brahmesh who will one day come to my help indeed when I am in need.

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