control your trading emotions

13 Ways To Control Emotions In Trading — Is It Possible To Be Emotionless?

Any way you slice it, there's no way to be emotionless in trading.

No matter what you do, there will be emotions when you're dealing with money.

And, usually, it's these emotions that keep a trader out of his element.

But despite having no power to eliminate what you'll feel, you can be on top of it, and that's what we'll teach you in this article.

You will learn very specific tips on how to control emotions in trading so that you can improve and become a better trader.

What are the emotions you feel when you are trading?


But before learning about our tips, you first need to understand the emotions you have to tackle.

You see, trading gets you on a roller coaster ride of emotions.

Whenever you see your open positions fluctuate from a positive to a negative figure, you feel a certain way -- possibly fear.

And when you get from negative to positive equity, you feel something entirely different -- maybe greed or vindication.

That's the case if the market is moving slowly. But what if you're trading during a volatile time or volatile assets like currencies? 

Your emotions vacillate along with your account balance, and you won't be surprised if you get nauseous after getting through a trading session.

But it's not just the fear and greed that you'll grapple with although they are the two general ones. 

The others you may classify as levels of fear and levels of greed.

The image below is a classic illustration of all those levels.

And it's also delineated in a way the best represents the peaks and troughs of what a trader goes through emotionally.

trading emotions chart

How can emotions affect trading?


When you break down the successful trading components, it'd be divided into three parts: strategy, money management, and psychology.

Tackling emotions is also trading psychology, and it comprises about 60%. Money management accounts for about 30%.

And this may be a surprise to you, but having a good strategy makes up only 10% of successful trading.

The reason why psychology is the most important among the three is that it's the hardest to overcome when trading.

Even though you have a sound trading system or good money management techniques, all of it won't matter if you can't stick to it because you let your emotions get the best of you every time.

That's why if you can keep the influences of your emotions at a minimum, then only will you see your trading system and money management begin to work.

Tips To Control Your Emotions When Trading


Now, let's get on with the tips!

1. Have a plan

Careful planning is always integral in any activity, and trading is no exception. It's one way to control emotions because it levels your expectation.

The question is, what to plan for?

Traders often think that having a plan is all about strategy, like specifying the type of indicator to use or a candlestick's quality.

But planning in trading actually involves other aspects.

Great traders will plan for the coming week by recalling what had occurred the week before.

There's also a plan for approaching specific days like the release of the non-farm payroll report.

So, there's a variety of things to plan for and the major ones are listed below:

  • Strategies
  • Trading days
  • Managing Trades
  • Managing Risk
  • Trading Week

2. Know Your Entry & Exit Levels

Being clear of what level you will open and close trades is also crucial in managing emotions.

Think about it, if you define what your stop-loss and take profit is before you place an order, you have effectively removed a certain degree of uncertainty.

Most often, the big surprise comes in the form of huge and unexpected moves in the market.

And the last thing a trader would want is for that move to be on the opposite end of his trade.

However, with a stop-loss order in place, even if it's not at a level within a conservative risk rate, the most unfavorable scenario is prevented.

3. Practice

One of the best ways to become comfortable with something is to do it over and over again.

But that's kind of hard to do with trading since you have only so much cash to lose.

So how do you become a better trader through practice?

The answer is trading with a demo account and backtesting.

These two are the best ways to gain mastery of a trading platform, trading system, and trading process without risking real money. 

4. Don't Watch Your Computer Screen Tick Per Tick

If you're still new to trading or if you can recall the first few months you began trading, you may be guilty of stalking every move of your trade.

You stay glued to your computer screen, waiting for each second until you can close orders with gains.

But what can you recall from this old practice is that it does nothing but make you extremely nervous, especially if you don't know what you're doing yet. 

image of a charting software

And nervousness overwhelms your good judgment.

You may let trades stay on the losing side for so long but only to close them with a glimmer of profit.

And, if you're familiar with risk management in trading, you know that your account won't last very long if you continue trading this way. 

Thus, a good rule of thumb is not to look at your screen for more than five minutes. 

When you plan your entry and exit beforehand, you don't have to binge-watch on every tick of your trade because you know when to stop and when to continue.

5. Don't Scalp

There are different kinds of traders: swing traders, position traders, day traders, and scalpers.

The difference between all of them is discussed in this article. But the most short-term kind of trader is the scalper.

If you're a beginner, it would be best to refrain from scalping as its trading style may be too much to handle.

When you "scalp," you subject yourself to the cycle of emotions mentioned earlier at an extremely rapid pace -- think seconds to a few minutes.

Unless you have a reliable system for approaching the market this way, it's best to first stick to higher time frames like the daily and weekly charts.

6. Don't Use High Leverage

Leverage is invariably the killer.

The thought that you can make a lot of money with little capital is always tempting.

Now, if you don't know how risky high leverage is, then there are a couple more trading accounts that you need to blow up so you can fully appreciate its dangers.

You see, when you use high leverage, you assume that you're right; otherwise, why would you take an enormous gamble?

And guess what? That's greed talking.

And the more greed talks, the more sound reason gets overshadowed.

Remember, the goal is to lessen the influences of emotions like greed and fear.

Because you can be wrong 50% of the time, and what if you were and you used high leverage?

What's going to happen with your account?

That's why it's sometimes best to keep leverage at a minimum or don't even use leverage at all.

What you need to have are solid trading skills and a robust trading system.

Once you have that, you no longer have to rely on high leverage and luck to make money.

You can be fully confident that what you possess is enough to make money for you consistently in the long run.

7. Develop A System

A system is a strategy specific plan which encompasses risk management, entry and exit techniques, choice of analysis, and other details about your strategy.

Having a trading system lays out the blueprint for what you should do in the scenarios that you foresee from your trade.

For example, your open trade finally breaches positive territory. In such a case, what would your next step be?

Without a system, you might close it hurriedly.

Yet with one, you might consider waiting or even trailing your trade with a stop-loss.

A system defines these details, so everything is more mechanical.

You have defined the rules and the steps, you know what to do and all that's left is to execute.

As a result, the influence of emotions is kept at bay.

8. Trust Your Strategy but assess it from time to time

It's one thing to develop a strategy; it's another to follow it religiously. 

Sure, you can have a great system that works well, but if you're not confident that it will work, you might end up not following it at all.

You have to learn to trust your strategy or system so that you can assess if it really works or not.

Remember, you set the rules for your system, but if you're going to keep deviating from it, you'll never know the real reason for your wins and losses.

So, it's crucial to set rules, and it is even more important to follow it.

However, all of these is not to say that just by setting rules, you have positioned yourself for a lifetime of profitability.

What you have to do is to reassess your strategies from time to time, and you can do that with a trading journal. 

forex trading journal on computer screen

Intellinvestors' Trading Journal

One tip for using a journal is to assess your strategies in a specific time interval. 

For instance, if your strategy makes use of the daily chart, then a bi-monthly or monthly assessment of your strategy will help you understand your system's viability.

If you want a copy of our Forex Trading journal template, you can download it here.

9. Create Alerts

Alerts are applied to your charting software to notify you if the current price of the asset you're trading has reached or is moving past a certain level. 

It prompts you into taking action based on these automatic triggers and not by you eagle-eyeing every price tick.

Most trading applications have this alert feature available, including the popular MetaTrader 4 platform.

metatrader 4 alerts

But why are they useful?

Well, it's mentioned earlier that always watching your trades only involves your emotions even more. 

So, by creating alerts, you somehow use your platform's capabilities to rid you of this aimless monitoring.

10. Use An EA

Another great way to literally make everything mechanical is to use an Expert Advisor (EA) or trading robot.

With an EA, you have completely removed the human aspect of trading.

The trading robot automatically carries out every trade that your account takes.

This means that once you have specified all the parameters of your strategy, and this has been translated into the trading script that the EA follows, you basically have nothing else to do but see how it performs.

Still, you have to remember to reassess your EA regularly.

Remember, there's no all-weather EA, so you have to conduct checkups to see if your automated strategy is still functional.

Here's an online marketplace for EAs and trading indicators.

11. Trade Small And Work Your Way Towards A Big Account

Trading with a small account is usually unprofitable, but that's because most traders aren't using their meager capital the right way. 

On a margin account like with most retail Forex brokers, high leverage is readily accessible. 

This means that even those with less than a $100 balance will have the opportunity to get a much larger profit. 

However, as stated earlier, leverage can also work against you, so it's best to use minimal leverage or not even use it at all.

Now, how is that possible with a small account? 

Well, again, what matters is that you stay consistent. 

No matter how much your account is if you are making consistent profits, the chances are that you'll have the exact same profitable methodology when you handle a much larger account.

Besides, when you are consistently profitable, it may not be too wild to assume that you can work your way towards a larger account by compounding your profits.

12. Set A 1% Risk All The Time

Practicing conservatism in trading is also another excellent way to control your emotions, which can be done by placing a specific percentage of your account as the only amount you'll lose if your trade doesn't go your way.

Setting something like 1% of your account as your risk helps you in prolonging your capital.

We discuss the 1% risk per trade rule in more detail in this article.

The first thing you have to do is get the dollar value of the 1% of your capital to implement this. 

Let's say it's $1,000, so that's $10. If you're trading a currency pair, get the number of pips from your entry to your stop-loss level. 

Next, divide the $10 by the number of pips and multiply it to 100,000 to get the lot size you will use to maintain only a 1% risk in your trade.

Here is an article that covers this principle in more detail.

13. Learn More

And finally, the best of all the tips here for controlling the psychology aspect of trading is to learn more.

When you absorb more information and gain more knowledge, you get intimated with what you should and shouldn't do to become profitable.

The market is very dynamic, and each day presents you with a new lesson to study.

Learning also pertains to skill development.

Since trading, after all, is more of a skill than talent, you have a fair chance of becoming a better trade as long as you continue to upgrade your skills.


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