Overcoming Emotions As A Day Trader

By | July 1, 2015

Despair = Losing Money – Trading Better

Do not despair look at your losses as part of doing business and as paying tuition fees to the markets.

 

 

Disappointment = Expectations – Reality

Enter trading with realistic expectations. You can realistically expect 20%-35% annual returns on capital with great trading. More than that is possible but unlikely.

 

 

 

Regret = Disappointment in a loss+ Caused by lack of Discipline

If you followed your trading plan and lose money because the market did not move in your direction so be it, but if you went off your plan and traded based on your feelings and opinions then you should feel regret and stop being undisciplined.

 

 

 

Enjoying your Trading = Winning Trades – Fear of Ruin

Trading is much more enjoyable when you are risking 1% of your capital in the hopes of making 3% on your capital with a zero chance of ruin. It is not enjoyable when you are putting a huge percentage of your capital on the line in each trade and are only a few bad trades away from your account going to zero.

 

 

Wisdom = Square Root of Experience through years of successful trading

To get good at trading you have to trade real money. Wisdom comes from putting real money on the line for years and proving to yourself that you can come out a winner in the long term.

 

 

 

Faith in your system = Belief through back testing + Experience of winning with it for years

While you have to hold the opinion of whether each trade is a winner or loser it is different for your trading method. A lot of emotional trading can be overcome when you do not have doubts about your method. When you hold an almost religious fervor over believing in your method, system, risk management, and your own discipline you will overcome many of the emotional problems that arise with other traders in the heat of action.

7 thoughts on “Overcoming Emotions As A Day Trader

  1. jeejo raveendran

    In stock market Traders who realises that the less the percentage of returns with which he is fully satisfied with, then the safety of ur capital is more. First lesson capital preserved is money earned. Second lesson is not to trade with market rate all the time but enter & exit at specified levels with strict stop-loss & target fixed at the entry level, here the more the narrow ur entry & target the better the chances of trade being successful. Third lesson once after u enters the trade and realises that trend has changed against ur direction never wait for the market or momentum to come to ur direction to become profitable just exit the trade before the stop-loss gets hits. And last when u realises that the number of trades u have closed with no loss no profit before it starts making loss is more than than the loss making trades then u can realise that u have over powered ur emotions which is the number one culprit which destroys ur capital Like slow poison.

  2. RAJMOHAN

    NOBLE WORDS FROM NOBLE.

    ON A NUTSHELL, POSSESS THE FOLLOWING THREE TO PROSPER WITH 3% + MONTHLY INCOME

    1. GOOD TRADING SYSTEM 2. GOOD TRADING PLAN & METHODOLOGY IN ALL TYPES OF MARKET 3. TRADING PSYCHOLOGY ABOVE ALL

    A SUCCESSFUL TRADER WITH 3 TO 5 % CONSISTENT MONTHLY RETURNS SHOULD BE ABLE TO CONVERT 10 LAKHS INTO 10 CORES IN 10 YEARS ( COMPOUNDING)

  3. Bramesh Post author

    Thanks for giving your valuable inputs.

  4. chandra pratap

    earning 30% annually means if some one has put 1 lakh in his account he will b earning around 30k in a year that comes to around 2.5k per month, any body can earn many times more thn this any where else with very much less risk then he has to incur here.according to ur view i think some one needs to put 10 lakh here to earn 3 lakh in a year,thats around 25 thousand a month.i dont think this should b the way

  5. Noble

    When one tries to trade successfully in markets he will be met with several challenges. Foremost you need to have a trading system with statistical edge in markets. Keep fine tuning your system as market conditions change or you need to find markets which suit your system, but to identify them you will require several years of experience.

    Second part: even if you have a successful system you will not be able to trade successfully if you don’t have certain desirable qualities as mentioned above. To attain these qualities is real hard-work.
    At this point one realizes that all success lies within you.
    You have to change from within. You can get help from a Clinical Psychologist/ Master trader.This is a stage of self discovery.
    This part of trader development may take you years and some of them do not make it and quit trading.
    During the transformation process one may go to the extent of questioning every fabric of yours. Be prepared, it can turn nasty.
    It is during this time your will understand your true potential, and the true nature of market place and you will not be worried about the money you make/lose. You will be amazed at when you discover valid trade opportunities all over the place and say to yourself “i just can’t imagine how much of money I am making”.

    Many folks do not cross this stage. Once you have mastered this, you will be in the elite 3% of successful traders 🙂

    Folks Happy Trading!!

  6. suresh

    sir really nice read. But how does one stick to his plan/system in the heat of action? i mean when there is fear of missing opportunity or greed of having more profits?

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