Emotions are something all traders will have to deal with at one point or another during there trading career. Since trading is unlike any other occupation out there, you must be able to take control during hard times and not lose sight of your goals and rules. We have all been there at one point or another, entering into a trade that didn't exactly fit our rules. As that stomach churning feeling sets in and our blood pressure starts to rise as we see the trade go against us. Now at this point you can do one of two things, let the trade ride or close it and move on. Now it sounds simple and that's because it is. Lets look at a few tips and tricks you can use to make dealing with your emotions a little easier.
Put out the Fire Before it starts.
It's simple, before you let your self get all worked up, extinguish the fire. This includes any and all fire starters. A fire starter is something that can help the fire ignite. In our case when it comes to trading a fire starter could be breaking your rules or over trading. The list could go on and on, also each traders fire starter is different then the next trader. Now that you know what a fire starter is, make a list of all the items that could potentially start a fire within you before moving on.
Now that you know what your fire starters are it is time to make a plan on how to avoid them all together. For this article we will use one of my fire starters and that is FOMO. I am sure by now all of you have experienced FOMO. FOMO or Fear of Missing Out comes in many forms. For example when we see the market shoot up on a trade you would of taken we can get FOMO. This is because in our head we are cussing up a storm due to the fact the trade we would of taken would of been a winner. This in-turn leads to more FOMO as the market continues to push up. At this point you can do one of two things, enter into a horrible trade that most likely breaks all your rules or you can walk away for 15-20 mins and wait until the emotions are gone.
In theory this is a very simple and straight forward plan of attack. Get emotional or start to see one of your fire starters and you walk away. In the heat of the moment we can forget our plan and fail to walk away. This is when practice and reminders come into play. More on the reminders in a coming blog. When it comes to practice you must be consistent, just like your trading. See a fire starter and walk away no matter how big or small. Maybe you only need a 5 minute break but make sure you give yourself enough time to cool down.
Do not try and "stick it out" or stay seated in front of the charts when you see these triggers. There is no shame in taking a small break and collecting your self. I personally like to take a small break and go play with the dog for a few minutes or anything that will allow my mind to forget about trading for a few.
This all sounds very simple and it is but you MUST practice and be consistent so that when the time comes, you can easily put out the fire before it even starts. After lots of practice it will come naturally and you will do it automatically.
Comment down below on what your fire starters are.