There is no place for emotional feelings in stock trading still many investors flow in their emotions when the market situation goes negative. First of all, before entering in a stock trading a trader should very well know how to control their feeling while taking any purchasing and selling decision,
Emotions are what? It’s a strong feeling that derived from any circumstance which influences the thought process of a person. When I talk about stock market trading many investors lose their emotions that sometimes prove harm for their investment.
There is zero place for emotions in stock trading still many investors flow in their emotions when the market situation goes negative. First of all, before entering in a stock trading a trader should very well know how to control their feeling while taking any purchasing and selling decision, if you are too emotional then anyone can make you fool by diverting your mind. To deal with that you can refer stock tips recommendations from market experts in order to prevent wrong actions and frauds.
Here I am giving five best techniques which can help you to command on your emotional feeling.
1. Learn something new about trading –
Well one of the most important task for everyone, just stop overthinking and schedule some time to sit down and do the hard work to plan your trading – pick up a book, get some coaching, watch a video tutorial to enhance your understanding of the market. This will also increase your capabilities to think practically rather than emotionally.
2. Take a deep breath and try to refocus –
One of the popular and best strategies to refocus on trading goals. You should try a trick that can distract you from the trading world for just a few minutes. Go for a walk or you can go for a short trip, it will refresh your mind and then try to focus on what you were actually wanted and what actually happened. Why has this happened? Just try to analyse the main problem and resolve it using practical data.
3. Do not react to social media’s message immediately –
If you see some best trading tips trending on the social media networks or if you receive some tips from any other source you trust most, put that tricks first into your watchlist and examine it later. Like most of the financial market experts provide their best trading tips like commodity tips, forex tips or binary option trading tips on social networking sites to promote their services. These are good but do not start the trade immediately by considering these tips it may harmful for you. Make your own rule to control your strong emotional feelings then you can beat 80% of traders and investors easily.
4. Ask few question –
Fear is an emotional feeling and it also controls your thought process. To manage it you should ask few simple question to yourself –
1. If you watching your trade remain unfold just ask your self – Am I scared?
2. Review your trading strategies
3. Review your trading rules and size.
4. Change your trading techniques time to time.
5. Set a loss limit for your trade –
This is very important for an investor because the loss limit has been proved useful for many years it is an effort to prevent a bad day becoming even worse. After many losing trades, we generally feel negativity for our position. Money management is an important thing, by using limit loss you can control your loss in trading. A trader can manage their money using 5% rule, means any trade you will not risk more than 5%. This rule will help you to control your emotional imbalance.
It’s certainly a harrowing experience to loss money trade after trade during stock options trading, watching our hard earned money taken away by the market mercilessly. But painful as these trading losses might be, we should accept them as obstacles we must overcome in every other endeavor and pick up the lessons learned from each trading losses.
We should certainly not brood over such losses too long. The longer we let these losses overcome us, the longer it’ll take us to have the courage to re-enter our stock options trading for the chance to sharpen our skills further. A stock options trading journey is all about having the discipline to follow a trading plan and stick to it if it sometimes yields a losing trade, we have to analyze the cause behind this hiccup and refine our trading plan so that we would be prepared the next time the same scenario turned up again.
Thus, it’s important to analyze where we’ve done wrong so that we become wiser and won’t commit the same mistakes again. We must accept losses as part of our stock options trading journey and don’t give up too easily.
Here are some ways to minimize your losses during stock options trading and how you could learn from them :
1) Keep every trade to 5% or less of my capital
No matter how confident you are of a particular trade, maintain the discipline of not committing more than 5% of your capital in any stock options trading position.
Understand that every trade carries risks. I’ve picked up some costly mistakes when I was greedy and had plunged a great portion of my capital into so-called „sure bets“ and ended up having my hard-earned money eaten up alive by the market. Don’t be fooled that you could take money easily from the market, trading is a professional trait just like any specialized field and you need years of skills and experiences to understand how the market works.
Be cautious that although sometimes every technical indicators might have been lined up perfectly for the so-called „sure-win“ trade based on your analysis, things could still go wrong where the market reacted opposite to what you’ve analyzed and you ended up losing money. So you should always remind yourself never to „bet the farm“ on any „sure-win“ trades. But if you maintain every position within 5% or less of your trading capital, even when you encountered a few losing trades, you would still have balance capital to fight another battle.
2) Jot down your mistakes in your trading journal
I’ve realized that keep a trading journal of all my trades has been one of the most important step that I’ve undertaken in my trading journey. In my trading journal, I would record my analysis of the stocks that I would be trading an option with. Such details include daily trading volume, market capitalization, Stock Scouter Rating (from MSN MoneyCentral), past earnings history, gapping up/down analysis based on earnings announcement etc of the particular stock that I’m analyzing. I would also enter into my journal the reasons why I enter or exit a position.
Whenever I encountered a losing trade, the journal would become even more significant because I would write down explicitly the reasons behind the losing trade and what I’ve learned from this expensive mistake. It might be painful when these details were recorded during that time but they trust me they would return as important reminder to caution us when a similar trading setup is happening again.
So, take this simple advice and start a trading journal to record all your trades and decisions for entering them. Most importantly, write down the lessons behind the losing trades so that you’ll remind yourself not to commit them again.
3) Give and You Shall Receive
I think you might have heard the above phrase before. Although I’m no expert in this philosophy, I somehow experienced in my real life some truth in this statement. I tend to receive more when I naturally give more. I believe that if we want to be more successful in our trading, we should also develop the virtue of giving, although not necessary in monetary terms. It could be donation-in-kinds or simply an act of love or forgiveness. Of course, you should also give your devotion towards sharpening your trading skills each and everyday because the market would definitely reward you when you put in much efforts to understand how it works.
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