In a recent survey,I held on my Twitter 63% of traders indicated that they would like to be able to trade without emotion. Is this the same for you? Would you also like to be able to trade without emotion?
The reality is that you could not trade without emotion, and when you understand this and the role that emotions play in your decision making you would not want to trade without emotions.
For this you need to understand How your Brain Works
The main ‘controllers’ of emotional memories in our brains are the amygdala and the hippocampus.The hippocampus plays a major role in the forming and storing of memories whereas the amygdala is the controller of our emotions.
You need an emotional factor in decision making to appreciate possible outcomes of a decision. Most real life decisions cannot be based entirely on logic as the information that we have is usually incomplete or ambiguous
As seen in below chart, where we have discussed How Bran Process the Information.
Any Event which occur,the first part of brain which gets the signal is amygdala which is the emotional processing center of the brain . You are feeling before you are thinking. Emotions help you to understand the event is a Risk or Oppurtunity. Knowledge communicated via emotions, either explicitly or implicitly, enables traders to make fast and efficient decisions.
As discussed above emotion is linked to your decision process, then your goal in trading should not be to trade without emotion, I would suggest that the goal is to work with your emotions, to be more in tune with them, and to treat them as your friend rather than blaming emotion for your loss.
You need to experience your emotions, accept them and use them in your trading.
For example, there may be a feeling of fear on entering the market, because your last trade went into loss. However, if there is a good trading opportunity based on your trading plan then the effective action would be to take the trade, even though you have the feeling of fear.
Lets understand using the various activates we perform in life and how emotions affect them. Most of readers who are doing Job, do not really like your Job, Still you go to job do the work which your emotions might says not to do. So you are fine tuning yourself not to get directed by your emotions. You can have a sense of fear and yet still enter the market; or a feeling of anxiety when in the market and still stay in a trade. Emotions bring an urge for action but we do not have to take that action. So as a trader your work should be on managing your emotions not to ignore /control them.
sir can u suggest any book on how to train our mind ??
Google it please…
very well explained
Right sir. LOSSES/PROFITS determine our next trade.