Stock Trading Emotions

Emotions have no place in a day trader, swing trader, or even long term trader's outlook on their investments. When we try and protect ourselves from fear, we end up resorting back to our habitual instincts to enter into a place of comfort, whether or not that place is reality. We stop taking responsibility for our own fears and start blaming others for our problems. At the end, we try and find an easy way out by searching for magic indicators, or Holy Grail solutions.

When I think back to my stock trading career, I remember the times where I continuously changed my trading techniques to achieve the result that I was looking for. No matter what technical indicator or stock trading system that I used, I would yield the same result, losses. It didn’t matter what I did, I had to fix the real problem which was in my psyche.

Tough Trading Days - How to Cope

Trading is a marathon not a sprint. Often time's new traders allow one bad day to alter not only their trading styles, but their emotions as well. In order to be a successful trader you have to learn to put tough trading days in their place. Do you think every game Michael Jordan lost; he then went home and changed his entire style of play. When Tiger Woods has an off day, do you think he immediately calls his swing coach to develop a new swing strategy?

Remember, in part 1, I said that you need to be honest with yourself in what you are doing. Your trading approach or trading system is determined by the way in which you handle the choices that are presented to you. For example, if you associate more pain to a losing trade of a certain amount versus the amount of joy you get from a winning trade of the same size, you will subconsciously create a self-destructive pattern. This will result in “doubling down” or adding more shares to a losing position and possibly putting you in the hole even further. Ask yourself this question, do you add to your winning positions? The answer for most is NO.