6 ways to keep yourself rational in trading
How many of you feel at the top of the world after winning a trade, but down and broken when a loss occurs?
Many in you have feel this for sure. This happens when you play irrational and emotional in trading. Most of the time this emotion caught you in red. This is a prime sign of nonprofessional and novice traders. Frankly, to be successful in trading you have to stay calm, cool, rational and emotionally detached.
Trading is unlike playing PUBG.
Most of the successful traders remains calm and feel relaxed even after big losses. They don’t let these losses break them emotionally. That is one of the reasons, they are successful.
Trading is unlike playing PUBG. It is s serious business. As a decision-maker and business owner, you don't like to make decisions driven by full-on emotions. You don't go subjective. Right? In PUBG, sometimes you go subjective however you need to be objective in trading as your capital cannot afford longer being subjective.
So, what will you do to remain rational in trading? You might have your own set of rules to keep calm. However, I am suggesting here a few more. Check which one differs from yours.
Make a trading system that you understand and trust
In all professional and successful traders, one thing is common. They have built a sound trading system with their understanding of the market. They work with that system with utmost trust.
Each and every trader is at a different level of evolution so they have a different understanding of the market. At the same point, someone is bearish and the other one is bullish. And both are correct with their understanding. It is impossible to copy someone’s system with all his/her understanding.
If someone successfully copied a system, he will lack the trust on that. Anything mismatched between understanding and trust, costs you a big hole in your pocket.
Each and every trader is at different level of evolution so they have different understanding of the market.
Say no to noise
Noise is disturbing. Either in the form of pollution or technical in trading system or charts. There is another kind of noise that we get in trading - listening to the opinion of other people and reacting over that. You should have a filter to reduce noise - Technical or in the form of opinion. Take all opinions but follow your system when it comes to making decisions. Never regret if your system fails. Because failing is the part and parcel of the trading.
Never regret if your system fails.
Learn to work with your emotion
We all are human. We are emotional by nature. So, you should also create a system that helps you to work with your emotions- the system that works with emotion but it ignores all emotions when you want to go trading.
Trade with Money you afford to lose
As a trader when you feel emotional or down? Many of you bring hard-earned money into trading. You have lots of emotion attached with it. You might be thinking to make that money two times or three. But what happens when things go wrong? You feel down because you have invested your emotional money in it. So avoid to invest emotional money. And Trade with that money that you only afford to lose. Certainly, no one wants to lose money, but if you have a limited amount of money ready to lose in the pursuit of good gains, you will feel better. When you put extra amount you feel extra stress that kills your emotional well-being.
Learn to appreciate uncertainty
You must be aware of the uncertainly associated with the share market. Market reacts on news. Sometimes you witness big rally in between some panic selling. You should learn to deal with them or don’t trade when uncertainty is higher.
Trade when your mood is right
Your mind is the master of your mood. With control on mind, you can control your mood. If you are unable to do so don’t worry, make a strict rule that you will trade only if your mood is right otherwise you will keep your screen off. When you trade-in right mood, chances are high that you are going to score winning trades. With low mood traders are prone to make these mistakes, you should avoid them.
Trading makes you emotional that leads you to lose control over mind and money. However, most successful traders minimize their emotion with keeping calm and rational trading mind. The relaxed mind ultimately leads you to the path of successful traders.
As a trader, you must have some way to keep yourself rational. I would invite you to write that in the comment box so we can learn those ways as well.
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