Just like in Forex trading, stock traders also need to take hold of their emotions. Even the slightest uncontrolled emotions could ruin your entire trading plan and bankrupt you overnight. For example, having some losses in your trading session makes you afraid that you will have a losing day. The fear of losing could result in over-trading, over-leverage, or eventually, a blown-up account just with a few trades.
Actually, you can avoid blowing up your accounts if you take control of your emotions in stock broking and Forex trading. Detaching from all sorts of emotions could end up with a good trading experience. But what can you really do to control your emotions when trading? Here are some ways worth pondering.
Take a break and walk for a short while after each trade
Even as short as a few minutes, taking a break will give you a positive outcome. Because day trading is known as naturally fast and furious, it is totally easy to find yourself drowning in too many emotions.
What to do with this? Walk away or break away with your trading tempo. This is one way to control the surge of emotions when trading and greatly helps in clearing your mind. Remember that you are in control of your emotions and the market is not the one pulling you down.
Finding the least volatile hour
Most of the time, the trading strategies of day traders tend to work best whenever the price action is at its most volatile. When you try to trade in a highly congested market, you will end up getting frustrated and angry. Then, your emotions will break your trading strategy and it will ruin everything.
The solution when such a situation comes up is to take a break if you think that the market is not going right.
Taking a short break every after three consecutive losses or wins
Once you experience three consecutive wins, you will feel as though you have become a super trader. You will start to think that you will not lose and that you are now invincible. Then, you over-trade and over-leverage. That’s when the worst things start.
Meanwhile, when you encounter three consecutive losses, you will feel like a total loss. But you don’t want these thoughts. You then start to explode and revenge trade will become your next move. This is also something that will ruin you as a trader.
When you lose or win three times consecutively, you will get affected by it. To avoid exploding your account, take a break after three consecutive losses or wins.
Avoid checking your wins and losses while you trade
You don’t have to check your wins or losses from time to time. This will avoid any surge of emotions. If you feel like you want to peep at it, remember and read your trading rules again.
Check if you are scared
Fear is another destructive emotion. If you think you are scared as your trades unfold, exit as soon as possible. Then you can check again in stock broking or reduce the trading size.