Emotions and trading… those two words should never been uttered in the same sentence, right? But how about seeing emotions as a helpful tool instead of something to be avoided at all costs?
All too often, traders get the wrong end of the stick when they hear “if you have emotions when you’re trading, then you’re doing it wrong”. While it’s true that trading in a highly emotional state will hinder our ability to trade in a calm and discerning manner, unless we are all ,yoda-like enlightened beings, we are all going to feel some sort of emotion when we trade.
The problem though, is that for many of us, as soon as we feel an emotion, we want to push it away, feeling bad about ourselves and thinking “how can I get rid of this emotion?” Others have spent so long pushing their emotions away that they can no longer tune into them at all.
That is a real shame, and a missed opportunity, because the ability to tune into our emotions is a valuable tool in the development of our trading mindset.
Let me just get something clear. The word “emotion” means different things to different traders. To some, it might be the feeling of being completely elated or completely devastated after a win or loss. That’s not the kind of emotional I am talking about.
I am talking about the inner voice and the physical sensations that come with interacting with the markets.
Being able to tune into these thoughts and sensations without fear, in openness and curiosity, brings us increased success in the markets (and happiness in life).
In this way, emotions can be used as signposts. Not some inner voice telling you whether the market is going to go up or down (nothing in the world can tell you that), but perceived emotions or physical sensations telling you whether or not you are trading from a place of ease.
If you are not, don’t place the trade. Your emotions are giving you a clue that you have unprocessed angst; you are frustrated, desperate, hesitant, revenge trading, bored or any other number of unhelpful mental states.
Once you get good at feeling your emotions, you will begin to see them as loyal friends, keeping you out of any number of bad trades.
For a lot of people, really feeling emotions is a very strange sensation, especially if they have been pushing them away for most of their lives. The good news is that it is a skill that can be learned.
If the trade jumps out at you and you feel completely at ease taking it, get into the habit of doing a quick body scan to see if you can feel any tension or physical sensations, scan your mind too and if it’s all good then that’s the green light to go ahead.
You are trading from a place of ease, you are in the flow and you are at peace, whatever the outcome, because you know you have ,traded your plan when an opportunity presented itself.
Do that enough times and limit the number of times you trade from a place of un-ease and the results will be staring at you in black and white from your account balance.