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Your emotions play a major role in trading

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Your emotions play a major role in trading

As humans, having emotions is natural but the impact they make in your life is quite significant.

Trading is never easy. It requires a lot of patience, right strategies and knowledge. However, what people don’t seem to notice is that emotions can turn out to be very toxic in trading if you don’t tackle them well.

There are various negative emotions such as fear, hope, anger and greed. These emotions are disastrous if the trader fails to mindfully identify them and minimize their negative impact. For an instance, a trader may end up being angry after going through a loss and as a result, he would “revenge trade”.  After gaining profits, a trader may convince himself to continuously trade back to back, hoping that he would be able gain profits all the time. At times, the trader would be too hopeful or fear of losing money. The said emotions are negative which will obstruct your path towards success.

It is necessary to make yourself aware of how the market works and most importantly, understand how you are subjected to negative emotions. Therefore, market psychology is important. After all, the Japanese legendary trader, Homma Munehisa, identified how emotions of traders play a critical role in trading.

Train yourself to control your emotions, not the other way around.