How to Combat Emotional Attachment?

It is said - and wisely, I believe - that an emotional trader and his money are easily parted.

And yet in spite of working with only a demo account, I find myself as attached to it as I would to a live one. It is not uncommon for my heart to sink when I see the market take a nosedive when I went long; and it is equally not uncommon for me to obsessively check Oanda’s web interface every few minutes for updates.

And, of course, since markets move in zigzags rather than straight lines, I break a sweat every time minor trends turn against me - and my finger starts hovering around the “Close Position” button as my confidence in the secondary trend starts to wane.

Of course, this has its own advantages - I sometimes end up getting out of trades that would have gone against me had I lingered there longer. But more often than not, it ends up costing me money, as I close a temporarily unprofitable position only to see the trend go exactly the way I expected it to.

From reading this forum, I know that, to be successful, I, as a trader, need to emotionally detach myself from the money (whether real and virtual) and make decisions solely on calculations, not emotions. Unfortunately, given that uncertainty is the only constant in the market, when the trend seems to turn against me, that alone is often enough to make me reconsider my calculations, question my support and resistance lines and generally cause me to close the position prematurely.

For example - at the time of writing, I believe that the Pound’s position against the greenback is unsustainable, and that it’s going to take a plunge. On the basis of that expectation, I went short - but with the market fighting me every step of the way, I start questioning my assumptions and wondering whether the plunge really will occur.

So - do you have any advice and/or recommended reading for improving my trader psychology?

I think that your emotions are quite normal.

After all, we are human beings, not robots.

To be trading emotionless is to be unrealistic and to have impossible expectations of yourself.

Because there is leverage in forex, it is very important that you trade only a very small fraction of your total bank, like at most 2% of total.

As such, if you lose, you only lose a small amount.
This very greatly helps keep your emotions in check.

Trading large proportions of your total bank is opening the gate to an emotional roller coaster ride!! :eek: :eek: :eek:

[B]I suggest you might read “Trading in the Zone” by Mark Douglas.[/B]

i guess u just started trading demo?

haha…yea read the mark douglas one… and listen to his audio … google it… dont know where to get it again.

mark douglas is really long winded…though =D

I agree with Tymen’s recommendation.

In addition, I would add this one to your reading list: [B][I]Trading for a Living[/I][/B], by Dr. Alexander Elder.


Done and done - Amazon orders placed! Just gotta work my way through Ponsi’s book first now :smiley:


Here are my suggestions and things I do:

  1. first and forment develop an edge. That means learning a method or way of trading that is repeatable and has a decent win/loss ratio over a sample size of 20-100 trades and the winner are better than the combined losers. (the losers don’t take away your winners)
    If you have an edge that you know works if you just do it right, it makes it much easier to not freak out.

You have to learn to think in probabilities and go with what you think is most probable to happen

  1. When you do get emotional, reflect and ask yourself why. Are you afraid of losing money? Are you afraid of just losing? Do you get mad because you take losses like personal insult to your abilty to trade? These emotions are particulary dangerous because they make you see things in the market that aren’t there. Instead of seeing the data in front of you, you end up seeing what you hope for or fear.

  2. before every trade define and tottally accept the risk, or don’t take the trade.

  3. If it’s the money, I’ve found just ignoring the money and thinking of it only in pips or points helps to detach yourself from that feeling of, “OMG I’m losing money, best get out before my sl is hit.”

  4. Make sure you have PRE DEFINED entrance strategy. In other words you only enter if x&Y&z happen, NOT because you saw a pair start to move.

  5. Have a pre defined exit strategy. Not just for the TP, but also if things start to look bad before your TP. You can turn a lot of losers into winners by knowing a little and stopping out postive before a trade hits SL.