Emotion, the real reason of your failure in trading

[Asuspawer09]

Emotion is, for sure, everything that is going to make you make the wrong decisions, but I think most of the time, a huge thing that affects most of the traders is the lack of knowledge and awareness of what they are doing, yes they are doing trading, but they are not totally aware of it, and they are not aware of what they are going into. Mostly, they were just gambling or betting, similar to it they are throwing mostly a huge amount of money into leverage, thinking that they already figured it out and they are always going to make money on it.

For me, if you understand it fully, you can easily tell your limitations to it. You know and understand that there were will a high chance that you are going to lose money and you need to be ready for it, you need to only risk an amount of money that you know is not going to affect you a lot or at all. Because if you do it blindly, that is where you are losing a huge lot of money and when that happens, that is where emotion could kick in because you are gambling it, you dont have a plan and you know that you might lose it all.

[yudi09]

You can manage this emotion as you wish if you can maintain the preparations properly. In most cases, emotions will continue to lead you against the right decisions you have taken. To avoid this situation, get used to living a disciplined life. Greedy attitude most of the time harms you financially, be it in sensitive areas like trading or gambling.
The main thing is that your limited decisions in financial matters always give good results. If someone indulges emotions for the sake of extra profit, they cannot be successful.

Emotions arise when self-confidence is too high, as the OP mentioned. This usually happens when a trader is in a winning position and the process that’s generating significant profits is going exactly as planned, so in practice, they’re making a profit.
The right decision is to have the discipline to walk away from a profitable position if you’re feeling unsettled or uncertain—because continuing could result in a loss.

[Powerjumboo]

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.

Trading is not for emotions, trading is for the patient. Those who trade with emotions on the trading platform can never make a profit because emotions never allow a trader to make a profit. Overconfidence makes people lose money. Those who trade with excessive confidence and excessive emotions can never make a profit and till date I have not seen any trader who trades with excessive emotions making a profit. If you want to trade, you should definitely avoid excessive greed and excessive emotions and then trade, but the most important thing is to adopt trading strategies and use money according to the ability to lose.

[puloweh555]

Emotion is, for sure, everything that is going to make you make the wrong decisions, but I think most of the time, a huge thing that affects most of the traders is the lack of knowledge and awareness of what they are doing, yes they are doing trading, but they are not totally aware of it, and they are not aware of what they are going into. Mostly, they were just gambling or betting, similar to it they are throwing mostly a huge amount of money into leverage, thinking that they already figured it out and they are always going to make money on it.

For me, if you understand it fully, you can easily tell your limitations to it. You know and understand that there were will a high chance that you are going to lose money and you need to be ready for it, you need to only risk an amount of money that you know is not going to affect you a lot or at all. Because if you do it blindly, that is where you are losing a huge lot of money and when that happens, that is where emotion could kick in because you are gambling it, you dont have a plan and you know that you might lose it all.

Yes, that's right. Basically, most traders fail not because of emotions first, but because they don't understand risk, lack knowledge, and trade like gambling. But it can't be denied that even if we master all the knowledge if we can't control our emotions we can still end up facing bigger losses. So, to become a good trader we need to be able to combine everything at the same time.  

Especially when it comes to emotions particularly greed after winning or fear after losing this is the most fatal part for any trader. When you get greedy with leverage you feel safe because you're only focused on potential profits while ignoring the risk of losses. The result is overtrading excessive position sizes, and ultimately you experience losses.

Emotions really can't be completely eliminated especially since that's just how human nature is, but what we need to understand is that emotions can be managed by having strict rules that are stronger than feelings. Because without that everything you do in trading always goes haywire since you're just following your mood.

[Shinpako09]

Trading is all about patience.

I couldn't agree more. Overconfidence makes them forget that there is no 100% win rate in trading. After having a green streak for days, once they lose, they will start to chase their losses thinking they can take it back. Losses are part of trading, there's no way you can avoid them. Just accept your losses coz it's a normal thing in trading. Don't even dream of a 100% win rate coz there is no such thing.

As long as within a month you are still in profit, a few days of losing is fine. Don't try to chase it by using high leverage just to make up and reach your supposed goal amount.

Don't let a few losses ruin your judgment, at the same time don't make bold moves just because you have experienced days of winning. It doesn't mean that if it works for you today, it will work again tomorrow. The market doesn't move the same way every day.

[citywise2]

Sometimes we can make a profit on 10 consecutive trades, but all the profits from those 10 trades can sometimes be wiped out by a single loss. This is because, even when we realize we’re being carried away by our own emotions, it’s often very difficult to stop ourselves. Sometimes we’re unwilling to accept small losses, like 2 to 5%, so we refuse to cut our losses. And sometimes that decision leads to even bigger losses. When emotions take over in the market, we forget about technical analysis and the like; we’d rather hope the market moves the way we want it to. But we’re the ones who should be following the market trends, not hoping the market will follow our expectations. I’ve made this mistake several times myself.

If we know what we are doing, we don't need to cut loses but the system does that for you. Once we  set the SL based on sound technical analysis then if the market chooses to move to the other side up to your SL, then we let it go and focus our strength on another trade with the previous as another lesson learnt.  Stop loss are meant to be a trader's last defence when a trader is wrong.  Losing a few trade however do not make one a bad trader that should be the mindset.

[Pandorak]

If we know what we are doing, we don't need to cut loses but the system does that for you. Once we  set the SL based on sound technical analysis then if the market chooses to move to the other side up to your SL, then we let it go and focus our strength on another trade with the previous as another lesson learnt.  Stop loss are meant to be a trader's last defence when a trader is wrong.  Losing a few trade however do not make one a bad trader that should be the mindset.

What you’re saying makes sense, considering that stop loss orders are indeed an essential part of trading. You may understand how to analyze the market quite well and have a lot of experience with various traded cryptocurrencies, but if you don’t have good money management or a clear trading plan, the profits you’ve accumulated can be wiped out in a single trade.

In this case, stop loss orders are there to prevent that from happening, they’re used to minimize the risk of total loss. Let me give you an example: suppose you use a risk reward ratio (RR) of 1:2. Out of 6 trades you make, 3 TP and 3 SL, but because of the money management rules you’ve established, you still end up with a profit. That’s roughly how it works.

[Natalim]

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.

Too much emotions will never be good in trading, even with short term ones. Because it will only bypass your set plans and goals, and lost totally your focus in trading. And let's also be honest, the reality for traders that they all do that for the sake of money is not helpful either. Being greedy for profits may often lead you to unrealistic decisions and goals, and that's what happening to those traders who lose consistently in the market. They don't trade anymore because they have knowledge and skills to do it, but everything is now tied to money, and for me trading becomes unhealthy then.

[Tamaperdana]

Emotions arise when self-confidence is too high, as the OP mentioned. This usually happens when a trader is in a winning position and the process that’s generating significant profits is going exactly as planned, so in practice, they’re making a profit.
The right decision is to have the discipline to walk away from a profitable position if you’re feeling unsettled or uncertain—because continuing could result in a loss.

Yes, when we trade and win consistently, we naturally become more confident, and we might lose control and continue trading. But in my personal experience, the most difficult time to control our emotions is when we experience losses. Because at that point, our capital is reduced, and we haven't made any profit. Then, wild thoughts emerge, telling us to trade again using large leverage. At that point, I believe emotions can be truly dangerous. Because in situations like that, we completely forget all the risks and continue blindly.

Therefore, I believe that in times like these, emotions can be very dangerous. Therefore, when we trade, we must have our own rules and be able to manage everything in an organized manner. For example, we must limit our trading; for example, we can set a rule that we cannot lose more than two times, or two percent, per day. So, for example, if you've lost twice, you're not allowed to trade again until the next day. I think this strategy is quite useful,, because even though it's initially difficult, once you get used to it, you'll feel more organized.

[laijsica]

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.

Too much emotions will never be good in trading, even with short term ones. Because it will only bypass your set plans and goals, and lost totally your focus in trading. And let's also be honest, the reality for traders that they all do that for the sake of money is not helpful either. Being greedy for profits may often lead you to unrealistic decisions and goals, and that's what happening to those traders who lose consistently in the market. They don't trade anymore because they have knowledge and skills to do it, but everything is now tied to money, and for me trading becomes unhealthy then.

Trading is unhealthy for most people but some have also turned this method into a profitable business by maintaining patience and controlling emotions. Although there is a risk equivalent to gambling, control and fund management can bring you success from trading. You may need to change the position you are currently holding. Even if you have a short-term plan in trading, sometimes you may need to hold a long-term position to get a favorable situation. Use the stop loss strategy to avoid losses This strategy is very fruitful for a trader. To maintain the stop loss strategy, do not use the entire amount of funds available to you.

Although the main objective of trading is to make a profit, to reach that point, you have to pass the test of patience. Various instructions are often given regarding fund management but avoid complications and never inject funds into your portfolio beyond your financial capacity.

[Loyang]

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.

Too much emotions will never be good in trading, even with short term ones. Because it will only bypass your set plans and goals, and lost totally your focus in trading. And let's also be honest, the reality for traders that they all do that for the sake of money is not helpful either. Being greedy for profits may often lead you to unrealistic decisions and goals, and that's what happening to those traders who lose consistently in the market. They don't trade anymore because they have knowledge and skills to do it, but everything is now tied to money, and for me trading becomes unhealthy then.

Trading is unhealthy for most people but some have also turned this method into a profitable business by maintaining patience and controlling emotions. Although there is a risk equivalent to gambling, control and fund management can bring you success from trading. You may need to change the position you are currently holding. Even if you have a short-term plan in trading, sometimes you may need to hold a long-term position to get a favorable situation. Use the stop loss strategy to avoid losses This strategy is very fruitful for a trader. To maintain the stop loss strategy, do not use the entire amount of funds available to you.

Although the main objective of trading is to make a profit, to reach that point, you have to pass the test of patience. Various instructions are often given regarding fund management but avoid complications and never inject funds into your portfolio beyond your financial capacity.

The possibility of profiting from trading and the possibility of winning are much higher in trading than in gambling. Gambling is completely dependent on luck, but trading is not completely dependent on luck. To profit from trading, you have to gain knowledge and control yourself, and the most effective thing is to control yourself. No matter how much a person is a trader, if he is not able to control himself, then he will definitely face losses. There are many people who have not learned trading well and they are not as good traders as others, but one good thing about them is that they can control themselves. A person who can control himself can profit from trading even with little knowledge.

[David Astor]

Couldn't agree more about the psychological cascade that leads to liquidation. It almost always starts with one bad trade where you refuse to take a loss, which leads to revenge trading and ditching risk controls altogether.

Personally, I think the hardest part of trading isn't finding a good entry strategy, but managing your own ego when a trade goes against you. Accepting a small, controlled loss is part of the business cost. The moment you start averaging down with high leverage or switching to a Martingale strategy to "get even," you’re no longer trading - you’re just gambling against the order book.

[citywise2]

Couldn't agree more about the psychological cascade that leads to liquidation. It almost always starts with one bad trade where you refuse to take a loss, which leads to revenge trading and ditching risk controls altogether.

Personally, I think the hardest part of trading isn't finding a good entry strategy, but managing your own ego when a trade goes against you. Accepting a small, controlled loss is part of the business cost. The moment you start averaging down with high leverage or switching to a Martingale strategy to "get even," you’re no longer trading - you’re just gambling against the order book.

Whenever you start to chase a loss trade, then be ready for whatsoever comes your way. A lost trade is a lost trade and the worst thing a trader can do at this point in time, is to starting thinking for the market, no the market always have a mind of its own and it is only when we fit into it that we begin to have an advantage. Yes when averaging or Martingale becomes your approach to trading, you are just chasing losses and most times these are points of no return.

Most traders are beginning to incorporate robots/AI into their trading because it is able to take out emotions and trade strictly based on its analyses of the market. Some people however avoid it saying it can't tell when enough is enough, it is however the choice of the trader to make.

[Leahized]

Emotions arise when self-confidence is too high, as the OP mentioned. This usually happens when a trader is in a winning position and the process that’s generating significant profits is going exactly as planned, so in practice, they’re making a profit.

So what do you think, should a trader be too confident? I think, too confident is not good. This does not only apply to trading, but in real life everything suffers from the tendency to be overconfident. in particular, for that the mindset should be developed towards acquiring sufficient skills. It enables everything to proceed flawlessly as per the plan.

The right decision is to have the discipline to walk away from a profitable position if you’re feeling unsettled or uncertain—because continuing could result in a loss.

Although many experienced traders can be found nowadays, it is very difficult to find a trader who conducts himself in a disciplined manner. So when a person continues to gain, then he loses self-awareness in his addiction to profit and cannot come back from wrong decision. To get rid of all this one must be patient and it is better to be satisfied with less profit.