What is Emotional Trading?

Emotional trading occurs when personal feelings and emotions impact trading decisions. While emotions can sometimes provide valuable insights, they typically lead to poor trading outcomes.

The Challenge: Learning to separate emotions from logical trading decisions is crucial for long-term success in the markets.

Trade Quality Over Quantity

Focus on entering only high-quality trades rather than mediocre opportunities. Trading less frequently but with better setups leads to greater success and fearless trading.

Buy or Sell with Confidence

Your trading rules must have a proven foundation of success. Confidence in your strategy is essential for holding trades through market volatility and temporary setbacks.

Don't Watch the Scoreboard

Like athletes during a game, traders shouldn't obsess over their P&L during active trading. Focus on the chart patterns and technical signals rather than profit/loss figures.

Plan Your Trades

Predict major market moves and understand that markets don't move in straight lines. Pullbacks are natural and necessary for accumulating traders and shaking out weak positions.

Plan for Possible Losses

Before entering any trade, determine your exit criteria. Identify what market conditions would invalidate your trade thesis and require you to close the position.

Don't Get Over-Excited

Even when you spot an exceptional trading opportunity, maintain discipline. Overexcitement can lead to position sizing mistakes and rule violations.

Tolerate Risk

Risk is inseparable from returns. To trade without fear, you must be comfortable with the risk you're taking. Never risk more than you can afford to lose.