Emotions are an essential part of human life. In fact, emotions and feelings are the factors that distinguish us from the rest of the living beings on this planet. They also protect us in our everyday lives and make our lives worth living.
When someone compliments you, you feel happy. When you expect misfortune, you get scared. Of all the emotions, fear is very powerful. It helps us protect ourselves from external harm. So, we can say that we are very attached to our feelings.
However, it is important that you keep your emotions in check while trading and be logical. The game is such that your emotions will be tested every now and then.
Institutional traders understand market psychology better than any private trader. They take advantage of the emotional imbalances of private traders to gain an advantage over them and are almost always successful.
So, what do you need to do as a private trader to be successful?
The answer is to remain unemotional and believe in your strategy and logic more than how you feel about trading.
But how?
The best way is to detach yourself from your emotions and the money you put into the trade. When you're scared, it's hard to think clearly. That's why you make hasty decisions. This eventually leads to mistakes.
Always remember: the more you stay calm and detached and can think objectively, the easier it will be for you to control your emotions.
Successful traders put their logic above any emotion that could sabotage their trading. They stay away from anything that could trigger emotions, such as the amount of money at stake, the latest news they've come across, current market events, etc.
As a newbie, it is almost impossible to remain emotionless. It is only too human to avoid any risk or loss.
One of the ways I finally managed to stay emotionless was by treating my real account like a demo account. I started to believe that the money in my real account was just play money. But at the same time, I followed every single rule I set for my trading strategy. This helped me a lot to execute my trades professionally.
I learned to trade like an electrician checking a fuse box.
Finally, at the beginning of your trading career, you should never risk your entire savings or any large amount. This will only amplify your emotions in the event of an unfavorable scenario. Always give priority to logic and stay away from anything that lets your emotions into play.