In today’s world trading is one of the best ways to make money online quickly and fast. A lot of people doing trading. But not all of them have succeeded. Only 5% of people out of 100 can make a profit from the financial market. Cause it’s not a game brilliance. It’s a game of probability. Obviously, a good strategy is indispensable for trading. It can make you profit. But not every time. Sometimes you might have to face losses. And in that situation, you have to control your emotions. If you can’t control your emotions and take trades randomly without following your trading plan, you might blow your trading account today or tomorrow for sure.
What is Emotional Control in Trading?
Control emotions in trading mean controlling your emotions when trades go opposite sides or face losses in trades. Emotions control in trading also means avoiding taking random trades without any plan. The first step to managing emotions when trading is to identify what causes them and how they affect your behavior. For example, you may feel scared when you see a sudden drop in price, and you may panic sell or move your stop loss.
Why Control Emotions in Trading is so Important?
As I mentioned before trading isn’t a game of brilliance. If trading is a game of brilliance then there would be a lot of traders who would make millions of dollars easily. There are a lot of talented and brilliant people. But they are still at a loss in trading. Why? because trading is 20% technical and 80% is psychology. Emotion control is one of them. No strategy is 100%. If a strategy works 90% accuracy and if you don’t control your emotions you will be in a losing phase in trading. That’s why emotion control is so important in trading.
12 Ways to Control Emotions in Trading
1. Don’t Trade on anger
When you are angry you should skip trading for some time or for the day. It doesn’t matter why are you angry. Just skip trading. Anger can force you to make a wrong decision which makes you lose in trading. After one loss you want to recover money from the market instantly and thus you take another trade. Which is called revenge trading.
2. Skip Hope Trading
Hope trading occurs when a trade goes wrong according to your analysis and you still hold the position because you feel a hope that the market will come to your side. It maybe happens sometimes but when it doesn’t. It will take away all of your money. Maybe you also faced this situation in the past. You should always be logical and accept that the market does not always move as we think. So just skip hope trading.
3. Patience for the Right Opportunity
The market is full of opportunities. So if you miss an opportunity then wait for another one. But always stick to your trading plan. If the market doesn’t meet the criteria according to your trading plan then you don’t need to take trade. You can not find opportunities every day. So don’t force yourself to trade. Today or tomorrow opportunity will come. So wait for the right one.
4. Take a Break after Each Trade
Always try to take a break after taking each trade. It doesn’t matter if you win or lose that trade. Just take a break for 30 minutes or 1 hour. It will refresh your mind and help you a lot to control your emotions.
5. Don’t be Greedy
Greed is one of the most dangerous enemies for all of us. Not only for trading. In real life also. So how to become not to be greedy in trading? You should always set a target. It may be different from one another. For example, you set a 5% target of your total capital. If you gain 5% of your total capital. You should stop trading for that day no matter what happens. Even if you see another opportunity occur. You don’t need to trade. Skip that.
6. Fixed Quantity of Trades.
Just like the capital gain criteria your daily trades should be fixed. Set a fixed amount of trades that you will take every day. Not more or less than that. If you gain 5% of your first two trades and you set three trades per day. Then you should skip the third trade. You don’t need to take another trade.
7. Always Saves Your Profit
This technique will control your emotions like a pro. Believe it or not. You should try it. Then you will know how powerful the technique is. Suppose you set 2 trades a day. If you win the first one. Don’t risk all of the winning money that you make a profit from the first trade. You must think that you have to save 50% of your profit. So risk only 50% of your first trades. In this way if lose the second trade. You will still be in profit. That will help a lot to control emotions in trading.
8. Use a highly high-winning Strategy
Your emotions will make you trade randomly when you see that your strategy doesn’t work for 3 or 4 trades consecutively. That’s because of the low win ratio strategy. Always try to use a strategy that has a high winning ratio with a low-risk high reward ratio. Use these strategies to increase your profit, reduce your risk, and control emotions in trading.
VSSNR (Very Strong Support And Resistance)
9. Trade with the best Brokers
Always try to trade those brokers who have low spread and fixed spread. Cause spread plays a very important role in controlling emotions while trading. High spreads always have the possibility of touching the stop loss and thus it causes unexpected losses. Which is also causing us to lose our emotions. Best brokers have a very low or fixed spread. Some of them have no spread at all. The best brokers of all time.
10. Focus on the Process
The main problem of the new traders is they always focus on money. They focus on how much money they can earn or lose. But this is not the case. A new trader should always focus on the process. In this way, he can make himself a better trader. Does he follow all of his rules and plan and so on? So try to focus on the process. Money will come after you. In trading those who don’t think about money earn most of the money.
11. Do Exercise or Yoga
Exercise yoga or both of these are considered a very good form of controlling emotions in trading. A pro trader always does yoga or exercise. It helps to run blood circulation well. Yoga helps us to keep our minds calm and connect our body and mind together.
12- Never Give UP
You may know all of these things. But you still can’t control your emotions when you need to do it. Because It takes time to develop all of these virtues in you. Practical knowledge is more important than theoretical knowledge. So you need to apply these in real trading. With the passage of time, you can fully control your emotions. Till then never give up.
Conclusion
The difference between a professional trader and a new trader is a mindset. They are the king of emotion control. They know well how to behave when they face losses and control their emotions. If you become a master of emotion control. With that, a good strategy and mindset are also needed. Then no one can stop you from becoming a successful trader.