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When was the last time your emotions influenced a trading decision?
I'm collecting trading stories about how emotions influence trading decisions, and I'd be grateful for yours. Just complete the rest of this sentence "tell me about the last time your emotions influenced a trade decision". Many thanks in advance for anything you can share...
know thyself
Can you help answer these questions from other members on NexusFi?
Yes, emotions are knitted tightly into our trading decisions. Could you elaborate on a recent example?
I think I suffer from emotional knocks and tilts more than most - that's why I am so interested in this area. An example from my own trading would be exceeding a max number of trades in day. I have several recent examples and the trades past my limit would sometimes improve my P&L, but mostly not. In addition I'd find that it was the day(s) after these breaches where my discipline would continue to go down hill.
last week I was looking at the market and didn't take an entry....fear kicked in and I didn't want to not trade, so I was looking for a less than stellar setup....I rationalized that I didn't want to not trade, so out of greed I decided to take a riskier trade....
luckily I snapped out of it on the next bar when my entry bar didn't go anywhere....so I closed the trade on a 1 tick loss and shut my computer down to clear my head so I didn't revenge trade.
different emotions fueled every aspect of the trade...even the strong emotion to shut my computer down after I closed the trade.
I'm sourcing these stories from various places - really interesting and helpful to hear first-hand about the interplay of emotions on trading decisions. Here's another example I picked up last week (anonymous and I'm paraphrasing a little to keep the length down):
"things went ok yesterday, but I just got more emotional than I should have. I don't like to admit it but I was chasing the month's figures I guess. February was alright in terms of money made but not great and I chased a couple of late trades that were marginal at best. I just have a nagging sense I let the discipline slip and really I had no need to chase. It's not a big issue but I know I let myself down a fraction"
I've been interviewing traders for a number of weeks asking "tell me about the last time your emotions influenced a trading decision" and getting great insights. Here's an a few lines from an interview last night (I'm paraphrasing as I don't record the calls, just take notes):
"over-analysing is my main issue. I'm pretty good at pre-trade routines and usually have a high level of conviction going into the trade itself. But sometimes (and I haven't worked out why) I will start to re-think the rationale once I am in.
It doesn't seem to matter if the trade gets moving or bobs around my entry point - just sometimes I get drawn into double checking my reasoning and once I start doing that my conviction drops away.
More often than not I'll close out the trade or tighten my stop too much and come out for a small loss. And of course my initial thesis is usually proved right. Bloody annoying."
I like this example because it shows a distinct change in thinking between the pre-trade and live trade scenarios.
One of the requirements to successful trades is the ability to enter the trade and see it to the end--win or lose. If the premise of the trade is valid it doesn't matter if it is a winner or a loser. There will always be losing trades. It is just the nature of the beast. Not staying in the trade precludes winning eventually on a trade that goes underwater,-- and most are for some period of time, you can't pick the exact point to enter any trade, just an area-- as long as the trade stays within the parameters set before it is entered. Proper risk/reward analysis means the losers are outpaced by the winners for a net profitable trader.
One good indication for me that I am on the right side of a trade that hasn't moved yet is that I feel really uncomfortable instead of complacent - why is it that the best trades are the hardest to sit on?
