It doesn’t matter how much you are monitoring charts and keeping up with this market because trading based on emotions always have a big impact on your results. If you fail to control the emotions, it can pose a threat to your planned trades. Most traders talk about being afraid and panicking while making some moves but the scale of emotions in this sector goes beyond that. The emotions they talk about are only the tip of the iceberg floating above the water while the greater portion is hidden.
Therefore, traders must identify problems that are caused by improper control of trading emotions so that emotions don’t drive trades in the future.
Missing out on trades
If you notice that you are constantly missing out opportunities to execute trades despite your potential to enter, you need to consider it a problem. The root cause of this problem is the fear of losing money in case of entering the wrong trade. When traders have this sort of mentality they think more about the negative prospects instead of focusing on the numbers. Risk is something that comes along with this investment industry, so if you are always indulged in thinking about the risks, then it will be hard for you to move forward in your trades.
Instead, eliminating the mentality of not following the numbers can help you to solve this problem. Then you should also work on your confidence and your trading strategy to have more faith in yourself when entering trades.
Not controlling small losses
Sometimes one might wonder about how a small amount of loss turns so big within a single trade. Often, traders don’t have the rules to minimize their losses. Making losses in trade is nothing wrong unless you don’t know how to keep them in check. Your losses need to be within the limit you can manage and should never cross the level where you will find it hard to manage. Traders with winning streaks also make such problems and it is mainly led due to reckless trading. People often forget to apply stop-loss to their deals which can cost them a huge amount of money.
So, in case you are facing a huge amount of loss, you need to be alert to stay put and not to repeat that mistake ever again. Here, you can’t expect to have winning trades 100% of the time. Only by embracing small losses can you build your trading career slowly.
Trades that are too good to fail
When traders are confident about the previous trade set up, they continue to think that the market will continue to remain the same as he thought and thus lets his guard down. Unfortunately, this trading market is a mysterious place where you cannot say what is going to happen in the next moment. So, trading based on your hunches might not be a good idea, especially if you are a beginner. This is because a beginner is yet to learn the prospects of this economy. So, they should stick to technical analysis to help decide what is going to happen next.
Calling off deals too soon
This is also scenario that arises due to uncontrolled trading emotions. Maybe a trade has made some good profits, or you may think that the trend has reached its peak and that it will reverse at any moment. So, you ended your trade by shortening your position size. However, you observed that the market is still going and had potential scope for you to make more profit. Now, this situation is saddening. This fear that the market will turn is usually caused when a trader trades big and doesn’t have the confidence to risk their account balance. In this case, the set and forget strategy can be very helpful to decrease the intensity of this problem over time.
Trading based on emotions is something that no one has control of except you. It is up to you how you deal with them. So, for your own sake, you need to be able to identify problems and find a good, workable solution.
