How to Control Emotions while Trading – Strategies and Techniques to Help You Gain Control

Defusing Your Feelings and Conquering Your Emotions

How to control emotions while trading? In the heat of the moment, when you experience a sudden rush of emotion (fear, excitement, joy), it’s easy to let that emotion take control. Overcome by feelings, our analytical minds shut off, and we fall into the full power of emotions. Whether the feelings are positive or negative, they will always have the power to seriously hurt our trading performance. 

In order to get a handle on your thoughts and feelings, it’s essential to take a step back and see them for what they really are, not just how they make you feel. This process is commonly referred to as defusion.

In this article, we’ll take a look at several strategies and techniques to help you control emotions while trading.

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Keep Tabs on How You’re Feeling

The first part of turning your emotions and feelings into productive experiences is to know what those emotions and feelings are and when you’re feeling them.

A simple way to do this is to write down your feelings as you’re experiencing them. This can be in a notebook or a calendar, or however, you like. Start simple if you need, monitoring your emotions throughout your workday. 

As a picture begins to form of your emotional state over a day, take a closer look to see if there is anything that stands out. If a particular time of day causes a specific emotion, see if there is an environmental factor playing a part. Are you crashing after your morning coffee? Is afternoon light or lack of light impacting your mood? Play detective and connect the dots. 

It’s important that while you’re looking for changes and their causes, you also need to accept that these emotional swings are going to take place over the course of a day. The goal is not to suppress or avoid these feelings, and it’s to understand the causes and effects that they have on your mood. While some thoughts can be connected to physical stimuli, others might just happen because they happen. 

If you can’t connect a feeling to an external stimulus, that’s perfectly normal. Thoughts can come and go without any clear reason. In these cases, it’s important not to fall into them. By this, we mean not to let them take over your brain. A sudden, spontaneous wave of doubt doesn’t need to control the rest of your day. Take a step back, see it for what it is, learn from it, and move on. Don’t be held captive by an unexplained sensation.

Put Some Distance Between Yourself and Your Thoughts

This is the key to controlling emotions while trading (and anytime, really). If you can take a step back and see your thoughts and feelings, you’re on the right track to controlling them while trading. 

How many times have you gotten stuck in your own head or been your own worst enemy? This usually happens when you’re completely consumed by your thoughts. In this state, it’s impossible to see what is right in front of your face. 

Think of a beautiful, clear, sunny day. You walk outside your house, and you can see for miles. You can see buildings and hills, as far as the horizon will let you. Now imagine that same perspective but on a cloudy day when the full view is blocked. This is similar to what happens when your emotions and feelings get in the way of how clearly you can see what is in front of you.

When your mind is clear, and your emotions are at a distance, you’re able to see farther. When your emotions are too present and distracting, your vision is blocked, and you can’t see as far. It’s not easy to distance yourself from your thoughts, so don’t be discouraged if it doesn’t happen as fast as you’d like. Practice every day and be patient. The result will be worth the effort.
When your emotions and feelings get in the way of how clearly you can see what is in front of you

Increase Awareness and Practice Mindfulness

A great tool to help you achieve distance from your thoughts is to practice mindfulness. Mindfulness will train your brain to be more aware of the thoughts and feelings as they’re occurring.

The practice of mindfulness will help create a space between your emotions and your reaction to them. This pause in between helps you create a reasonable response to your feelings and not an impulsive, rushed reaction. 

Give Your Thoughts a Name and Let Them Pass

In addition to mindfulness, another way to control thoughts and emotions is to label them. The next time you’re experiencing strong sensations, sit back and just look at them in your mind. As they appear, label their thoughts. When you think of something, visualize it and give it a tag. See it and say, “That’s a thought.” Do the same for feelings.

If you’re angry, visualize it and label it anger. Do it for the next feeling and the next thought and on and on for about 15 minutes. It might feel foolish at first, but you’re training yourself to hold your thoughts and feelings. This puts them at a distance, away from blocking your view. 

Create a New Narrative for Your Feelings

Another defusion technique is a slightly different version of the labeling technique described above.
This method involves saying what you are experiencing rather than just feeling something. For example, if you are sad, rather than saying, “I am sad”, you might say, “I am experiencing the sensation of sadness.”
This analytical way of looking at feelings and emotions can create a good distance between you and the feelings. This allows you to more clearly see them and react in a rational way. This new perspective can help you gain new psychological insights.

Bouncing Across the Screen

The last method that can help you to control emotions in trading is commonly referred to as the “bouncing ball.”
This method should make sense to anyone who has sang karaoke. When you sing karaoke, the lyrics are highlighted, and a bouncing ball hops along the top of the letters, indicating syllables.
The application of this to dealing with your own emotions involves writing out your feelings and then reading them, imagining a bouncing ball jumping from one syllable to the next.

How to Control Emotions while Trading – The Bottom Line

Defusion is not about changing or destroying the thoughts and feelings you have. You’ll never be free of wandering thoughts or intrusive emotions. The goal is to recognize them and deal with them. That is the main promise of effective defusion. The practice will help you put your thoughts and feelings at a proper distance where you can rationally analyze them and use them to help rather than hurt you. 

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