Disclaimer - Please discuss this respectfully. I have noticed some aggressive, sarcastic and angry posters when people disagree with them. Not everyone needs to agree with your opinion, it’s OK.
There are dozens of ways that traders give up profits and habits/behaviors that are counterproductive to trading. I want to talk about one specific area which is “emotions”. When I started my journey into trading I wasn’t a week in before I started hearing about “no emotions allowed” trading. I jumped on board because I myself made a handful of very dumb decisions due to my emotions. I eventually began preaching “no emotions trading” to others. Looking back I realize I was saying it because it sounded good and everyone else was saying it. Digging in deeper though, that statement really didn’t make sense to me. Why would we want to trade without emotions? We are humans and not robots, so I am not going to beat myself up over having emotions. We all love and are passionate about trading and being successful, so emotions are going to be par-for-the-course.
Part of the success I see now comes through emotions. By that I mean I always enter a trade with a specific plan, but I will break that plan if I start to get a bad feeling about the trade. That intuition is delivered to me via my emotions. Just in the last month I have closed about half a dozen trades early because of an emotional response I felt due to the price action I was seeing. In every case I closed my position the price collapsed shortly thereafter. I walked away with solid gains, which would have become losers otherwise.
Thinking through this topic, I don’t think it’s realistic or healthy for a trader to “eliminate” emotions. I also think it’s far too vague to tell other traders to eliminate their emotions. What does that even mean? Is there a way we as traders can be more specific and offer more useful advice? I don’t think emotions are the problem, but wrong application of those emotions are certainly a problem.
I know this is a sacred cow in the trading world so it will elicit a wide range of responses. I hope this was at least thought provoking. Remember, please be polite and respectful when discussing.
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I’m thoroughly suspicious of emotions and intuition in trading. Imagine being approached for a loan to help someone open a trade. Imagine they said, “Well, I need the money because I just have a hunch about Webistics Inc. I can’t explain it so you’ll just have to trust me. About 10k ought to cover it”. Now imagine what you would say.
If you have a “bad feeling” about a trade, I think that’s just your brain processing the TA very slowly.
That’s an interesting take and I think it supports the idea that you should both have emotions and use them as part of a larger analysis that is going on in your mind. In your examples, if someone might be trying to sell you snake oil or you “feel” like a trade is bad and have some negative emotions about it, it would be wise to listen to those emotions and use them as part of your decision making process. Good stuff!
Interesting topic.
I think when many talk about not trading with emotions, what is meant is that we should trade based on our trading plan and what we see on our screens, not getting carried away when the trade starts moving and making knee jerk decisions.
Then there’s revenge trades and greed, where emotions can really damage our accounts, so need watching.
Namaste
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+1 for your comment on revenge trades! A major problem I see in the traders sphere, and a problem I personally dealt with in my early years of trading.
Great topic indeed. It is hard to turn off your emotions during trading, we are humans after all, not robots. Besides, we don’t have to turn them off, only control them. In my opinion, the bigger the experience is, it would be much easier to get rid of a negative emotion or manage the over-excitement and greed. You can get emotionally touched but you should avoid getting emotionally affected. It’s normal to feel stressed, scared or too excited but I think once these emotions come ahead, better to back off a bit because pressure and stress aren’t good advisors. I think that the key is to gain enough knowledge and experience which will lead to confidence and that way you will put your emotions into the right place, they can even help you along the way. For sure, trading is a mind game and it’s not for everyone but it’s quite tempting and challenging.
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