Emotion, the real reason of your failure in trading

[Rubuchi]

Only that most traders go about learning the manu different skills and strategies to trade so they can win many trades than they lose but never give a strong attention to learn about how to control their trading emotions. Stop loss shouldn't be a thing to avoid for any trader, you can't have it both ways, so it's either you risk losing much without it or with it you minimize your loss. I guess that's what manu calls risk management. Most of all, what actually causes fears and emotions in trading is not only made when a trader tends to be greedy, and impatient but when he constantly uses funds that were never meant for trading. It's like risking what wasn't meant to be lost, the reminder of it breeds fears.

as a matter of fact, everybody has their way of expressing their emotions which is not completely a bad thing to do. That is what makes you a human being and that is what differentiates you from a robot or a bot, emotions. And some times the emotions also have their advantages because I don't think one’s emotions only ruins your chances always. No I think sometimes your emotions do help you make some decisions positively but maybe most of the time it is the worst decisions you made based on emotions. Trading is not gambling, it is strictly based on your analysis and other factors being considered whereas your gambling is just based on luck so if you as a trader haven’t understood the trade yet, it is best to avoid the trading

[Smack That Ace]

No, I think you are wrong with such statement because some thread in this trading board is about emotional control and trading psychology, unless you are not following up discussion here that much which may be the reason you may not noticed.

The op is right with his sentiment when he said that lack of emotional control is the main reason some traders lose money in the market, because emotions have a way of making you doubt your own analysis, even after having a lot of confirmation that your analysis are right, so for any trader to be successful in trading, he must be able to tame his emotions, by trading with only what he can afford to lose, that way he wouldn't be making an emotional decisions while trading.

I might have missed some thread, but that's what I have seen. There are very few thread or discussion that truly focus on the importance of emotional control.

As for emotion and psychology, even if people understand how important they are, actually controlling their emotions is not easy at all. As I said, it's not like knowledge. It takes a lot of real experience, self awareness and discipline, and in reality, not many people develop those qualities. It's easier said than done.

People keep talking about becoming successful trader, but once again, I haven't seen that many people actually achieve it. This also shows just how difficult it is to control emotions.

[TheUltraElite]

Emotions are part of it but the real reason is you actually . That’s why they always say is you vs you , when come to trading having a good self control is golden and will give you more wins you can ever imagined, this what differentiate pro from newbies, being a pro depends on how you handle situations in your daily life and trading in a whole . Loss is normal thing in trading , is part of the game and as pro trader you should be aware of that , so trade with the aim to build not to hit the jackpot like gamblers.

Not everyone has the nerve to trade is what I have understood over the years. Nerves of steel are required to pass through bad times in trading.

Another thing is that many traders are using borrowed money to trade, these people I dont consider them as proper traders because to be a proper trader you have to put in your own capital to trade. Otherwise everything goes haywire and there is zero concept of mental stability during the holding period.

To have that nerve, you need to be a proper trader and you need to have cash cushion to rely on in case the trades go bad. Not to mention sticking to spot trading only.

[qurbanshah02]

No, I think you are wrong with such statement because some thread in this trading board is about emotional control and trading psychology, unless you are not following up discussion here that much which may be the reason you may not noticed.

The op is right with his sentiment when he said that lack of emotional control is the main reason some traders lose money in the market, because emotions have a way of making you doubt your own analysis, even after having a lot of confirmation that your analysis are right, so for any trader to be successful in trading, he must be able to tame his emotions, by trading with only what he can afford to lose, that way he wouldn't be making an emotional decisions while trading.

As for emotion and psychology, even if people understand how important they are, actually controlling their emotions is not easy at all. As I said, it's not like knowledge. It takes a lot of real experience, self awareness and discipline, and in reality, not many people develop those qualities. It's easier said than done.

People keep talking about becoming successful trader, but once again, I haven't seen that many people actually achieve it. This also shows just how difficult it is to control emotions.

Those who aim to be successful do not express such emotions and go towards their destination by controlling them. This is quite difficult for a common man because he is afraid to control his emotions in the world and feels that if he does not succeed in it, his life will be difficult and these emotions create problems for him. A few months ago, I was also in such emotions and was afraid, but I got courage and my hard work paid off. And now I feel that what I have gone through was easy, so the time that has passed seems like heaven. Only those people who are afraid in trading are those who have borrowed money or trade for their parents and take losses, they come under pressure. Such people always lose money in the market due to emotions and these emotions harm them in different ways.

[taufik123]

-snip-
Most traders are saying use stop loss, do this, do that but emotions from a single or two bad positions set the bad emotions that easily caused trading assets liquidated.

Trading is all about patience.

Controlling emotions is not easy, I myself have been in situations where I have to return losses when the trades I made lost and earned about 50% loss.
It made my emotions unstable, the strategy was messy and all I had in mind was just wanting to win and return the initial capital, no longer wanting to make a profit.

This chart will give you an idea of how Emotions or psychology on trading are very influential.

[EarnOnVictor]

Stop loss is not what make you to be a good trader, it is about how you are able to manage your emotions by not disobeying your own trading rules/plans/strategies.

Most traders are saying use stop loss, do this, do that but emotions from a single or two bad positions set the bad emotions that easily caused trading assets liquidated.

Many things quality a trader, and none of them should be taken for granted. Stop loss (if the trader chooses to use it) is just one of them, and if the trader's plan encourages it, that means it must be adhered to, as it would be so beneficial in the capital and risk management.

However, you are right about the psychological part, emotion is an issue of many traders. For this, no matter what they know in trading (stop loss or not), if they can't be disciplined, they will fail.

[CryptopreneurBrainboss]

All these things are interconnected, work on your emotions by trading with the amount of money that you can afford to lose. You can average but do not go for martingale and trade just good coins like bitcoin.

A trader that lacks self discipline, don't have emotional control over his decision making and don't keep to his rules and regulations is someone that isn't going to have a long trading career. You can't ignore all this and then expect you to have an excellent career, trading works with emotion as the market thrives on fear and hype. Succeeding at trading does not really matter how good your strategy is but as far you can't control your emotions then greed will begin to devour you and you begin to lose significantly. Trading is an act, therefore you have to be performing each time you trade and this involves navigating different emotion and an emotion that can help you a lot is being self aware, confident of yourself and also understanding the market to know when to buy, wait or sell. Once you are able to conquer your emotions, the market has nothing left on you as you are going to experience massive improvement in your trading outcome.

[Oshosondy]

Many things quality a trader, and none of them should be taken for granted. Stop loss (if the trader chooses to use it) is just one of them, and if the trader's plan encourages it, that means it must be adhered to, as it would be so beneficial in the capital and risk management.

However, you are right about the psychological part, emotion is an issue of many traders. For this, no matter what they know in trading (stop loss or not), if they can't be disciplined, they will fail.

This is exactly what I am saying, but many traders will not understand their potential until they start to use and be satisfied with trading with little amount of money. This can help them manage emotions, but they will not understand and be getting their trading assets liquidated. Discipline starts from using small amount of money to trade.

A good trader can have $5000 in his account, but decide to use $1000 to trade. Stop loss will not come his mind until he use higher amount of money to trade. Stop loss is good, but traders need to first practice patient trading and learn how to trade without stop lose. After that time, they can continue to trade with stop loss.

[Awaklara]

do that but emotions from a single or two bad positions set the bad emotions that easily caused trading assets liquidated.

I've been in situations like that before. It even took me a long time to be able to control my emotions while trading. But sometimes, the situation can still happen again. Now we can stay calm and patient when planning and executing trades. But at different times, we might still become impatient when trading. I don't know if this only happens to me or maybe some other traders experience the same thing too.

[Adiljutt156]

No need to explain too much because we already know emotion is one of the biggest problems in trading. FOMO, greed, panic, and revenge trading can easily ruin your plan.

Once emotion takes over, that’s usually when you start making bad entries and chasing losses. Especially in day trading, you need discipline and consistency. It’s not like gambling where one lucky win can save you. You need to follow your strategy most of the time if you really want to reach your target.

But if you’ve been trading for a long time and you still can’t control your emotions, maybe day trading is just not for you. Long-term investing might fit better. You buy, hold, and wait instead of dealing with pressure every day.

It's true that day trading needs consistency and discipline, and it's not like gambling where one lucky win will save us, but for retail traders, it is not that they are losing because they lack discipline, they are losing because they are trying to outsmart the system.
Fomo, greed and panic are the exact things that ruin day trading. But we just can't blame emotions here their assumptions are somehow part of their results. Buy, hold, wait, wait and sell, long-term is a strategic move here, and if we can't control our thinking day trading is not for us. Trading is a system to strip our capital, and holding is how we protect it ! (That's what I think).

[snowpega]

After you have seen yourself as a very good trader, that has graduated from the newbie trading, you set trading plan, you achieved it and used it to be making money, but later overconfidence become the start of greediness, you increase leverage and later it started with small losses from stop loss before it will later be followed by not using stop loss that you think is helping you and you lose all the money on your trading account.
...

Being a trader is very difficult from my point of view. Because it requires one to be consistent in monitoring the market on the basis of technical analysis (TA) and fundamental analysis (FA). Right? So that one can catch the moment to make a profit at least once a day, maybe (if the person is a day trader). Other than this, yeah, you are correct about greediness. Although saying this will also not be wrong, that it's a nature of humans haha.

Because we always look for more and more or better than best. Like, if we have a thing better which is truly fine, and after that we greed more and go out and look for the best, and sometimes this habit returns as damage but nothing else. And the same fundamental also applies in the trading space. That is why never being over-greedy is the best option.

[omenswap]

After you have seen yourself as a very good trader, that has graduated from the newbie trading, you set trading plan, you achieved it and used it to be making money, but later overconfidence become the start of greediness, you increase leverage and later it started with small losses from stop loss before it will later be followed by not using stop loss that you think is helping you and you lose all the money on your trading account.

All these things are interconnected, work on your emotions by trading with the amount of money that you can afford to lose. You can average but do not go for martingale and trade just good coins like bitcoin.

Stop loss is not what make you to be a good trader, it is about how you are able to manage your emotions by not disobeying your own trading rules/plans/strategies.

Most traders are saying use stop loss, do this, do that but emotions from a single or two bad positions set the bad emotions that easily caused trading assets liquidated.

Trading is all about patience.

Letting emotion intervene will ruin an otherwise solid trading strategy, but remember you actually need a unique strategy/advantage grounded in reality to make money.

[Makus]

Trading isn't all about patience, you can be patient and still end up making mistakes due to greed and other forms of indiscipline. The main reason why a lot of traders lose money is because they trade without a plan or strategy leads to over trading, this is simply because the traders don't have a direction or focus, they just decide to keep trading with the intention of becoming rich within a short period of time but that's not how it works. Without discipline emotions would definitely show up especially when losses keeps on coming in, A lot of people say controlling emotions isn't an easy task, that is actually true but it is something that can be done with gradual practice.

[henmark]

A trader that lacks self discipline, don't have emotional control over his decision making and don't keep to his rules and regulations is someone that isn't going to have a long trading career. You can't ignore all this and then expect you to have an excellent career, trading works with emotion as the market thrives on fear and hype. Succeeding at trading does not really matter how good your strategy is but as far you can't control your emotions then greed will begin to devour you and you begin to lose significantly. Trading is an act, therefore you have to be performing each time you trade and this involves navigating different emotion and an emotion that can help you a lot is being self aware, confident of yourself and also understanding the market to know when to buy, wait or sell. Once you are able to conquer your emotions, the market has nothing left on you as you are going to experience massive improvement in your trading outcome.

We are not robots either, though; you have to remember that. Yes, it is not going to be easy to make this work with emotions, so we can't always run with our emotions all the time; it would hurt us. But we also can't be really looking at this like something we can do, such as robots would do. There are automated bots that you can use to trade for you; even some are using AI these days to learn how to be better traders as well. Not all work, but people claim there are a few that do. But that doesn't mean that we can be like that; we are going to have some emotions at times.

The reality is that people do not zoom out long enough, and that is why they lose. You could have some bad trades because of emotions, but if you make a profit from January 1 to December 31, then you are good. Doesn't mean all trades you do during that period will be profitable; some will be losses, some will be bad emotional moves, but long enough term and you are profiting means that you will be doing fine. Of course it is not easy, and of course it is a tough one, but you gotta look at it from a long-term point of view.

[Donk1]

Well in trading we have two changes one is the market, one is the individual. And to my understanding, human desires, needs, wants, and all the things that can truly offer us utility are endless. So when you think that you have crossed to the next level of trading be mindful it doesn't mean you are anywhere close to being a professional trader because as traders, we have to constantly learn through experience and our analysis.Best to say it's not about overconfidence. Trading isn't a competition it's you against your previous self. And if you can't adapt, change, or evolve, the market will surely do that, leaving you in a loop of endless losses because you thought you finally knew it all.As a matter of fact most folks don't know risk management is one way to manage our emotions, as emotions can bring both positive and negative effects depending on how well you understand your mindset......

[As-Soon-As]

Most traders are saying use stop loss, do this, do that but emotions from a single or two bad positions set the bad emotions that easily caused trading assets liquidated.

Trading is all about patience.

Only those who trade patiently can be successful, but those who rush and want to take profits face losses in a short time. Those who take small profits and use little leverage in trading can basically stay away from addiction. Like gambling in trading, those who are greedy for money lose and lose their money in trading, so that money can never be recovered.
Those who do not trade patiently will basically lose their money, but they should definitely learn from trading and stay away from excessive greed.

[Cheema02]

Okay, i want to share about this "emotion" thing...

Based on my experience in crypto before 2020, most of my mistakes were really because of emotion and being too impulsive.

I was still new at that time, and I trusted Bitcoin too much. When the price kept going up, I became too confident and emotional.

When Bitcoin reached the ATH, I should’ve sold already, but I was still expecting it to go higher. Then the market dumped and entered a bear market. That’s when I finally sold, so I ended up losing money. It was a bad experience, but at least I learned from it. After that, I became more careful and started looking more at the data, holding with a plan, and knowing when to sell.

Sounds like you were not into trading but investments, which proves that emotions don't just affect trading but investments as well. Of course, it's all about patience and discipline. Someone who believe they can conquer the market just because they have knowledge and experience, they can only go to a certain extent before they get back to point zero only because of their own mistakes, and those mistakes will be caused because of a lack of emotional control. Your knowledge, experience, and skills are of no use if you are not able to keep your emotions under control, because no matter how much work you put in to built an empire, if you lose your temper one day, you can destroy it all yourself, regretting later won't do anything.

Even though spot trading could also cause losses if you are emotionally unstable, but more than that, futures is going to rip you off if you know you have absolutely no control over yourself and your emotions. Futures trading for an emotional person is nothing less than gambling despite the fact that your knowledge and experience play a great role in it since it is generally trading and not gambling, but things such as greed, revenge trading, fighting against the market are never going to let you make any money.

[Youngrebel]

Stop loss is not what make you to be a good trader, it is about how you are able to manage your emotions by not disobeying your own trading rules/plans/strategies.

Most traders are saying use stop loss, do this, do that but emotions from a single or two bad positions set the bad emotions that easily caused trading assets liquidated.

Trading is all about patience.

I agree with these points, stop loss can be used by any category of trader meaning that it doesn't really show that you are a good trader or not and it's also about knowledge everytime even though that's important, the ability to control emotions is what makes you a good trader. This is the reason why it's said that market psychology holds about 60 to 80 percent relevance in trading.

The reason why some traders end up chasing their losses or do revenge trading is as a result of lack of emotional control, after incurring losses the best thing that's supposed to be done at that time is to reevaluate your trading strategy while taking a break for a while. Emotions makes traders to take the wrong decisions.

Trading isn't just about patience alone it is also about strategy because you might be patient and still end up making a terrible mistake, the goal is to learn how to control your emotions, without this having patience would be impossible.