Magazine

Avoiding Emotions in Trading

May 15, 2019 | 5:32 pm | The 5%ers' Blog > Magazine
May 15, 2019 | 5:32 pm
The 5%ers' Blog > Magazine
Avoiding Emotions in Trading

What We Think Doesn’t Help, Actually Does!

There is a typical pattern where traders are more often avoiding their emotions. But what we don’t realize is that emotions are not a bad thing. The negative thing is actually about traders avoiding them, which lands up taking away the advantage of the human mind, especially for our trading performance.  

Myth Buster

We need to break this myth about emotions interfering with traders good performances, when in fact feeling your feelings – negative or positive – are unquestionably beneficial for human beings. By forcing to bypass emotions, traders might end up indifferent for the market’s nuances and miss out on crucial hints in the market’s subtext and become unable to pick up what triggers us, and our growth would be stagnant.

Feelings vs. Numbness

As human beings, we can never really avoid our emotions, and fighting is pointless. When traders choose not to deal with their emotions, they are opting to create a routine that is mechanized and run on auto-pilot. Traders are not equipped to process certain information as we are not robotic. Interestingly enough – no algorithm for autopilot routines will ever be destined to work, as the market has ever changed behaviors. Surprisingly, avoiding our emotions are adding risk to our trading. We may find ourselves in trouble when the market changes behavior, and we are unprepared. In other words, our emotions are the fastest and smartest indicator for the market.

Trading on a Whim

At some point in the process of learning about the profession of trading – traders will look up mechanical trading systems that supposedly require less discretion and a non-brainer rule-based action plan. Traders believe that if they choose to use the options of automatic trading or pure technical trading systems, then they should succeed better. But, the fact is far from being the truth. Especially for most retail traders as Expert Advisors do not have any learning capabilities. Unlike the human mind, they cannot learn from mistakes or by changes in market patterns. We are not achieving what we would like to. Especially by traders using this route since it shows that instead of confronting and processing their emotions, they would rather rely on mechanisms that have no skills to improve.

“Traders can Embrace their Emotions.”

Human beings can be counter-intuitive and self-regulating. Instead of finding themselves in a rut of needing to use automatic algorithms that complicate their situations further, traders can embrace their emotions and attitudes by learning what affects them. Then, they will be able to consciously tune into their ability to make pious decisions to bring more success. Using our discretion in temperamental markets instead of only running on autopilot, will ultimately prevent us from moving into the danger zones and profit loses. Only a minority of traders stick to their counter-intuition, and this is why so few usually succeed.

Opposite Directions Do not Always Attract

Human beings are known for walking in the opposite direction rather than resolving their issues. But remaining in our comfort zones are not as effective as we think. We should be moving towards our anxiety and frustration, listening to what our emotions are telling us and appreciate the fact that we do have the ability to change the way we feel and the way we trade. Avoidance will keep us locked in our minds, while mindful cooperation is key to our salving.

Bringing Intimacy Into the Market

We are human, everybody senses differently, but most importantly, we all sense. No one is different. Emotions will always be involved with trading. Avoidance only separates us from becoming familiar and intimate with the markets. It is essential to be fully aware, understand the state that our minds are in, as well as, know what affects us and how not to avoid it.

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