Trading is hard, but it’s even harder because our emotions so often work against us. In this episode, I look at some ideas for managing emotions and putting them to work for you, instead of against you. Here are the show notes:
Every decision we make is a combination of emotion and rational analysis. We cannot eliminate emotion, so don’t try! The goal is not to eliminate emotions, but to manage emotions.
Common emotional mistakes traders make. Maybe you’ve made some of these?
- Forcing a trade
- Can’t pull the trigger (to get in or out)
- Staying in loser too long
- Reentering after getting stopped out
- Revenge trading
- Bigger size, trying to make it back
- Getting out too early
Emotions interfere with intuition because they use the same “channels” (physical sensations) in the body.
Be careful of emotionally charged learning experiences! The worst thing that can happen is you make a mistake, get lucky, and make a lot of money. When this happens, you should be very scared because you just had a bad learning experience.
How to manage emotions manage
- Understand your emotions
- Even “bad” emotions have a good purpose
- What is the emotion’s constructive reason for existing?
- Release emotions
- The Sedona Method has been useful for some people to release negative or trouble emotions. (Check out the book here.)
- Invite yourself to experience emotion fully
- Could you let go of this emotion?
- Would you let go of it?
- When?
- The Sedona Method has been useful for some people to release negative or trouble emotions. (Check out the book here.)
- Work to avoid emotional mistakes
- Pattern interrupts
- Use your emotions to work for you
- There is probably a followup podcast lurking here! 🙂
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Also, if you like the music for this podcast, then be sure to check out Brian Ashley Jones, my friend, and a fantastic singer-songwriter.
Enjoy the show:
Good podcast. Question – Wouldn’t saying to yourself, “I am probably wrong on this trade” result in asking yourself, “then why am I in it?” I understand its a heuristic to calm the nerves, but couldn’t it potentially cause an internal conflict?
Yes, perhaps… but trading is such a conflicting experience in so many ways (at least potentially)… I’ve found it to be a good counterbalance to other aspects of my behavior, but it certainly could be harmful to someone else.
It works for me, but your mileage may vary! 🙂
Thank you for your note.
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