Don't let your emotions make your trading decisions for you, here's how…
When you begin trading, it's very exciting. But it's only once you start to risk your cash on the market that your emotions really kick in.
Unfortunately no amount of trading on a demo account can replicate the emotions you feel when you put your cash on the line.
The major culprits that interfere with trading are fear and greed.
So what do you need to do to combat these emotions?
Read on to find out…
Understand the emotions you feel when you trade
When you trade, fear and greed are the two emotions
that can interfere with the decisions you make.
To win the battle against these two emotions, you need to understand how they can affect you. And you need to be patient and disciplined.
Don’t let greed call the shots
When you put a trade on and it’s going well, greed can step in. Greed can make you want to move your take profit to try to bank some extra profit.
It can also make you want to put more money at stake on a trade.
You need to ignore these feelings and stick with your trading strategy. If the trade goes against you, you’re increasing your potential losses.
Don’t let fear make decisions for you
Fear can push traders to make decisions they’ll end up regretting.
If you miss getting in on a trade at the price dictated by your trading strategy, you may go in at any price as you fear missing out.
You’re also likely to fear losing money.
The key to stamping out fear is to stick with your trading strategy. Your strategy must include strict stop losses, and clear entry and exit levels.
Don’t forget, when you’re trading geared instruments like contracts for difference and single stock futures, losses can quickly mount up. Moving stop losses just in case a trade goes your way is a recipe for disaster.
So there you have it. How to prevent your emotions from making your trading decisions for you.
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