Is it possible to defeat EMOTIONAL TRADING?
How many of us would like to become good traders and be able to have more income than losses?
But it doesn't just take a lot of study and the right experience, we need a cool head.
We shouldn't buy or sell at the mercy of the emotions of the moment.
Unfortunately, it does not happen infrequently that we let ourselves be influenced by emotions and have a too emotional approach to trading that can also lead to huge losses of money.
The real problem to be solved is to reason without the necessary rationality and to let ourselves go to the fears and anxieties of the moment, this exposes us to great risks.
It is not easy for those who invest their money to live constantly in situations of high stress, especially those who operate in the cryptocurrency markets that have high volatility and can suffer losses, unfortunately it can make us lose our lucidity.
One thing that must be absolutely avoided after a loss is to try to recover as soon as possible, because investing only driven by a feeling of revenge leads us to make imprudent and hasty choices.
But also the opposite case must be absolutely avoided, that is investing following a moment of euphoria perhaps for having scored an excellent profit.
In short, neither frustration nor excitement are good advisors when it comes to trading.
We must never, ever let ourselves be overwhelmed by emotions, either negative or positive.
Of course the trading activity always generates a great stress, but here the trader's skill must take over which is to be able to find his stability in the chaos of the markets and the information to be managed.
It is not an easy undertaking, in fact the trader abandonment rate is very high, especially novice traders who, suffering continuous losses, gradually begin to have less and less self-esteem in themselves and in their abilities.
Surely we have to work on ourselves, learn to manage our emotions so as to make it less complicated to bear the psychological pressure of trading.
The psychological pressure will always be there but can it be managed, how?
Finding our own STABILITY.
But where to start to find above all mental stability?
By setting our strategies in advance, making decisions in the most rational way possible.
It is clear that as long as we try to be updated on the value of cryptocurrencies and know about the trend indicators, there will always be a risk margin to take into account.
But every risk can be contained if we reason rationally following a logical planning.
What should planning include?
We need to develop a plan that includes EVERYTHING:
- when to enter a specific position and especially when to exit,
- to decide in advance which technical strategies to use,
- to make a list of all possible eventualities that may arise,
- to make a note of the news that may affect the performance of our investment.
Creating a detailed plan diverts attention from emotions, helps us focus only on the details of our trade and makes us feel more confident and prepared to face our job.
When we plan a strategy we must take into account any eventuality, both positive and above all negative so as to be ready to face any situation without acting on instinct because in panic.
In short, keeping track of our trading operations, through careful planning and the study of what happens daily to the markets, is an excellent method to concretely face the pitfalls of the sector, no longer allowing ourselves to be overwhelmed by our irrational emotions.
I hope I was helpful.