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How to control the Emotional Conflict.
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How to control the Emotional Conflict.

  #11 (permalink)
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tdrogers View Post
Thank you! Very nicely written. Where was this published?

Four Steps to Trading Success: Using Everyday Indicators to Achieve Extraordinary Profits: John F. Clayburg: 9780471414827: Amazon.com: Books

I can't say that I strongly recommend it, but there are a few interesting things in there. There are worse books out there than Clayburg's.

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  #12 (permalink)
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This reminds me of my favorite quote from the movie Wall Street, Gekko says " don't get emotional about stock, it clouds your judgement.."..
When you sit down to trade, be "Spock" (Star Trek), void of all emotion....trading should be mechanical not emotional..

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  #13 (permalink)
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You will get a lot of advice when it when it comes to psychological matters.
Some will come from a good place, like a paper trader who want to succeed or some that have more practical and real experience. But, I am going to tell you my not "politically correct" answer.

You cant tame, control, or subdue your emotions when you are in a trade.
I have been doing this long enough to know and conclude that after observing me, customers, CTAs, etc.
Are there non emotional traders? yes, and they have a narcissistic side to them and they are a minority.
They typically were aggressive in many other pursuits of their life. Again, its a minority, and they don't write trading books.

Position sizing, trading with a method, etc does decrease the "sweat level" but it does not eliminate it entirely.
If you learn to live with the fact that markets cause us to be emotional, you admitted to something and you stopped fighting it. On crash days you see market makers at the NYSE recline their heads with complete disbelief.
Are they not disciplined? They must have been through more crashes than anyone and still have the same typical behavior as a beginner. But, they are market makers, traders, and manage funds with success in the long run.

In the long run, you will make observations of the mistakes that you have done as a result of your behavior. So, despite the feeling you have, you will stay loyal to your method as oppose to your emotions.
Trading psychology books are great because they explain where certain behavioral tendencies come from, but making you aware of things does not cause a change in behavior.

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  #14 (permalink)
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mattz View Post
You will get a lot of advice when it when it comes to psychological matters.
Some will come from a good place, like a paper trader who want to succeed or some that have more practical and real experience. But, I am going to tell you my not "politically correct" answer.

You cant tame, control, or subdue your emotions when you are in a trade.
I have been doing this long enough to know and conclude that after observing me, customers, CTAs, etc.
Are there non emotional traders? yes, and they have a narcissistic side to them and they are a minority.
They typically were aggressive in many other pursuits of their life. Again, its a minority, and they don't write trading books.

Position sizing, trading with a method, etc does decrease the "sweat level" but it does not eliminate it entirely.
If you learn to live with the fact that markets cause us to be emotional, you admitted to something and you stopped fighting it. On crash days you see market makers at the NYSE recline their heads with complete disbelief.
Are they not disciplined? They must have been through more crashes than anyone and still have the same typical behavior as a beginner. But, they are market makers, traders, and manage funds with success in the long run.

In the long run, you will make observations of the mistakes that you have done as a result of your behavior. So, despite the feeling you have, you will stay loyal to your method as oppose to your emotions.
Trading psychology books are great because they explain where certain behavioral tendencies come from, but making you aware of things does not cause a change in behavior.

Excellent Post. Thank you! I have printed and posted.

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  #15 (permalink)
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sptrader View Post
This reminds me of my favorite quote from the movie Wall Street, Gekko says " don't get emotional about stock, it clouds your judgement.."..
When you sit down to trade, be "Spock" (Star Trek), void of all emotion....trading should be mechanical not emotional..

Actually, I hope that's not necessary to trade. Mechanical just doesn't sound fun. I'd rather be excited, angry, anxious, and disappointed over mechanical and emotionless. I would just like to learn to trade successfully anyway.

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  #16 (permalink)
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tdrogers View Post
Actually, I hope that's not necessary to trade. Mechanical just doesn't sound fun. I'd rather be excited, angry, anxious, and disappointed over mechanical and emotionless. I would just like to learn to trade successfully anyway.

While it is important that you enjoy trading as a career, each individual trade is not ever going to be "fun" in my opinion. Does a brain surgeon have "fun" during surgery? No. Surgery (trade) requires focus and discipline. The fun comes from enjoying it as a whole, all of the time (majority) spent outside of actual trades doing R&D, analysis, crunching numbers, spreadsheets, creating and graphing solutions to problems, etc. That is "fun".

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  #17 (permalink)
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tdrogers View Post
Excellent Post. Thank you! I have printed and posted.

Thanks! I appreciate you taking it as guidance and not an opportunity to lecture at you.
All coming from a good place.
Good luck on your quest.

Matt

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While it is important that you enjoy trading as a career, each individual trade is not ever going to be "fun" in my opinion. Does a brain surgeon have "fun" during surgery? No. Surgery (trade) requires focus and discipline. The fun comes from enjoying it as a whole, all of the time (majority) spent outside of actual trades doing R&D, analysis, crunching numbers, spreadsheets, creating and graphing solutions to problems, etc. That is "fun".

Mike

Roger that! Valid point. You are so right about what I was describing as "fun". To me it has to be "enjoyable" in the aggregate, but I guess not for each trade. It's all the things leading up to that decision to make a specific trade. Thank you!

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  #19 (permalink)
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Confidence

I totally agree with the confidence part. Besides, I think get to know how other people think is also important. When you find out actually there are lots of people who might have different emotions involved while trading, you will see that you are not alone, thus have less fear. I think the books related to stock market psychology or behavioral finance will be helpful.

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How I Control My Emotions (by 25 year trading vet)


As soon as I saw this thread on 'how to control emotions' as respects trading, I just had to chime in.

I'm halfway through my third decade as a trader and very early in my trading career I learned how to time the market turns with precision within my first 4 years of trading.

However, that alone was not enough to help me get over the hump to profitability.

While I may catch trades as moves begin, my emotions seemed to always get the best of me. I would either exit my trades way too early leaving way too much on the table, or (early on) I would sit on a trade too long and start to lose confidence in my earlier analysis (since no one is ever 100% correct 100% of the time, so that leaves room for doubt).

So how did I get mastery over my emotions?

I didn't.

Well, not like how some would define getting mastery over it.

What I learned years ago that has made it possible to trade, profit and continue trading while still having 'emotions' was the following:

1. Only risk a very small percentage of your account. As this is a relative term, for myself I tend to risk no more than 1-3% on any single trade.

2. In order to keep risk low, that meant having a timing method that is very precise. That I already had so no problem there.

3. Use a stop-loss and walk away! Check periodically but don't stay glued to the computer. If you are correct, it will go into profit. If you are wrong, it will stop you out so you don't need to babysit it. And as soon as it has moved enough into profit where you can move your stop-loss to breakeven (for a virtual free trade), do it.

4. Once your stop-loss is at breakeven, let the market do its thing. As soon as it makes a new swing (bottom if you are long, top if short), move your stop there and then learn to manage your stop-loss as profit accumulates.

Number 4 above is going to take some practice and familiarity with the market you are trading. But the KEY is to PLAN the trade, and then MANAGE the stop-loss. This helps take the emotions out of the equation.

If you get squirmy when the market moves against your position, antsy and it does not feel good, then you are risking too much initially. Do not do this and you'll be just fine. Small risk and small losses are painless when you have bigger wins and more of them.


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