Trading With Emotion: The Road to Ruin

Filed under: Learn Forex Trading |

 

Screen shot 2013-05-20 at 10.47.02Today, I would like to talk about one of the most dangerous elements of trading, and something that is a constant threat to every trader – that of ‘emotions’. How we handle our emotions as traders can make or break our trading success. You might think that you are in control of your emotions – but everyone has them, and as a result of that fact, everyone can lose control of them at some point. The key is to recognise when you have lost control, and to step away from the markets until you are back in control.

 

Before I became involved in the forex markets (and before I knew anything about trading really), I tried my hand in the stock market. I bought a stock from an oil company just before a particularly bad market crash, and I did something that many traders must have done in the past – I hung on to it. I just could not accept that I had made a bad trade. I had no stop loss, and as it kept falling, I kept buying more so that when it did recover, I could get out at a much lower price for a breakeven trade. However, it just kept falling, and falling… and it became a really emotional trade. I remember being on holiday in Thailand, and trying to stop thinking about it – but I just couldn’t and every night I checked the price and watched it fall further. Eventually, I sold for a loss of around 1500 GBP. It hurt, but it is something that I have never forgotten. I now always decide my exit point before entering a trade – and I never, EVER, deviate from this. By using a set and forget system, you too can distance yourself from your emotions when trading, and be more profitable in the process.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>