Have you ever noticed that right after a profitable trade in the capital market or the forex market, the next trade becomes a loss? Well, that’s something you can sometimes avoid. You see, always after a profitable trade, the trader psychologically tends to enter the market and make more profit even without a trading signal. This article will help you to control your emotions when trading, so stay tuned until the end.
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False self-confidence and even addiction to excitement and biting after making a profit in the market can easily end the trading job you have just started. After a lucrative deal, we may see patterns, patterns and signals in the market that have no external presence at all! In other words, we subconsciously satisfy ourselves to re-enter the trading position.
Before I go any further, let me make one point clear that sometimes some trades are down for statistical reasons only in your trading system with which you trade. What we are talking about in this article is about loss trades that you can control . Loss trades that are caused by calculations and are caused by subconscious mental functioning, and you need a well-written plan to control it.
Why do we lose after making a profit?
Right after a lucrative deal is the most dangerous time to trade. This may come as a surprise to you, but it has scientific and psychological foundations that we need to be familiar with.
After a lucrative deal, we feel good, we can not deny it, we can not stop it, and why should we do that at all, right? In any case, if we do not know how to deal with this feeling, this feeling of joy can lead to a catastrophe. When you are happy, a hormone called dopamine is released in your mind, just like when one of your trades is profitable. The danger we face is addiction to this hormone. You can easily get addicted to the hormone dopamine and feel good about it.
For a trader or an investor, this means that the chances of over-trading or doing something stupid from that trader increase because his mind subconsciously seeks to do something to release more dopamine and feel The joy will continue. When the mind is in this state, the ability to perceive risk and danger is significantly reduced, which in turn leads to doing things outside of our trading system.
The mind does everything it can to not lose that good feeling. Ironically, just like drug addiction, gambling, etc., dopamine is released in the body regardless of whether it is beneficial or harmful to the human body. That so-called deal, which is a deal that leads to profit and ultimately happiness, causes more dopamine to be released in the body. I hope you have realized how dangerous this issue can be for your trading account.
So the human mind gets what it wants, regardless of whether you make a profit or a loss, and we as traders or investors need to be aware of this genetic defect. The secretion of the hormone dopamine in trading is like a double-edged sword that can be used to strengthen both good and bad habits. It’s up to you to reinforce only good habits. You need to understand your mind and control it, not control your mind.
Solution to control emotions when trading
Now that you understand how easy it is to lose money after making a profit, it’s time to figure out how you can prevent it from falling into the well in the future. The way is to have a proper tail filter to prevent you from falling into that dangerous well. The stereotype is that probably, if we care about the Trading Plan ( program trading ) talk.
The solution to controlling emotions when trading is to dedicate yourself to your trading system. (For example, our trading system is price action .) You need to design a trading plan for yourself that tells you exactly what to do at any given time in the stock market or the Forex market to be random and unreasonable. Do not enter into a trading position. Inherently, we need to know our mental functions so that we can trade logically in the stock market and the forex market by filtering out various situations that cause dopamine overdose.
The following is a summary of helpful solutions to control your emotions when trading:
- Have a trading system or trading strategy and a full understanding of it
- Have a trading plan or trading plan written around the personal trading system
- Dedicate yourself to the trading system and trading plan specified
- Ensure that our trading platform acts as a filter and prevents miscellaneous actions in the stock market or the forex market.
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