Sunday, February 27, 2011

3. Don't know how to control emotions

  I know that all of you have heard about two main emotions in trading and those are
 Greed and Fear. However, there are other emotions  that are immanent while we trade. Emotions like:

  -Have you ever experienced on the market while watching the price action that you are not sure about entering
    into position or  how to move your stop loss. Maybe you should take profit but you are not quite sure.
    That emotion is called indecision.

 -If market suddenly makes large move and you don't know why. Maybe there was some economic news
  release and you forgot to check.  Something is shaking the market and you don't know what to do.
  That's when you have presence of  panic.

 -When price starts to go against us and we don't wanna close the position but we are telling
   our self: " It will come back!"  We just don't wanna admit our failure and we can call that
   ignorance or pride (to proud to admit that I was wrong).

 *But we all know that you shouldn't marry your position, just date your position and move on. (Date them!)

  You must learn to control your emotions and don't let them control you, because they are bad emotions.
  When you trade,  you must be relaxed and your mind has to be calm. I must say that you won't feel these
  emotions while trading on a  FOREX demo account but when you start trading on a real account, those
  emotions will come to the surface. You can   feel those emotions if you are watching the screen while
  trading. Some traders like to setup their positions on autopilot with pending orders so they don't have to look
  at the P/L ratio all the time. That is only one trick how   to avoid those emotions.

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