Trade with Your System, Not Your Mood

By | November 17, 2022 4:34 pm

Many of us believe we’re in control of our emotions when we trade, but sometimes we run into weaknesses. Maybe we become too attached to a stock, or get out of it too soon when it doesn’t perform as expected. Let’s explore some ideas that can help, including keeping a trading checklist to help prevent emotions from getting the best of us, and applying trading rules that can override the temptations we might otherwise be unable to ignore.

Consider keeping the following trading checklist somewhere handy as you trade. It can help remind your rational self to stay in control of the situation

Are you sleeping today thinking how much money you’ll make tomorrow?  Are you counting your profits before you’ve even sold it?  Are you imagining tomorrow’s going to be another strongly trending up day?  Believe me… you are not alone.  Upward strong momentum following upside strong surprises releases euphoria in every person.  In fact, it is these types of strong markets that fuels even stronger performances in the weeks ahead.  Or is it?

So before we rely solely on our human instincts to be greedy and hold all our positions, the first thing we should do is to analyze the charts with a keener eye on volumes other than prices and perhaps check up on what our history teachers have to say. Take away all our biases, and hopefully be mentally flexible to adopt with the perception of the markets, employ sound management practices while profiting with the trend.

Basically, you and I are both thinking the same thing.  We both have the same dilemma:

1.) We both don’t want to lose our hefty short term gains.

2.) We both don’t want to sell too early either (i.e. we want to maximize our gains even further).


The biggest problem that most traders face when first getting into the trading industry is not the difficulties of doing technical analysis or understanding the software, but the art of controlling emotions while trading.

The main reason why traders find this difficult is because there is no technical guide or tutorial about it. It’s all psychological and mental, which makes it very hard to learn from somebody else, especially if a person has developed in a completely different way.

Thankfully though, time and time again, dedicating hundreds of hours to trading and gaining experience help with mastering the skill of emotional control.

In this article, we will talk about some tips and tricks that may help you as a trader avoid emotions taking control over your trading habits, or ways you can practice discipline and not let greed steer you into a losing trade.

You will learn the exact moments that could cause emotional stress while trading and how professionals practice trading emotional control in these instances. You will also learn methods to avoid greedy trading and ways you can walk away from a trade with significant payouts rather than staying too long and taking some losses.

Set Trading Rules

Consider establishing some trading rules that can help you snap out of it when emotion comes into play. Of course, different rules apply to different traders depending on their trading strategies and goals, but some general ones can be applied in many situations. Here are some rules you might want to put on your trading checklist:

  • Set up stop losses.
  • Set stringent risk management rules for how much you trade on a daily or weekly basis.
  • Establish strategy rules before putting a trading plan into motion.
  • Try to anticipate several possible moves when entering a trade so you can be prepared to respond without hesitation or doubt.

There’s no right or wrong when it comes to controlling your emotions. Work on establishing your own personal risk guidelines such as capital invested, risk per trade, and other factors that will eventually merge with your trading strategy. Avoid during volatile conditions or before the release of market-moving news. Last but not least, relax and remember that trading requires patience and should be treated like any other business. Most businesses, for the most part, will not make you rich overnight and the same goes for trading the financial markets.

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