Emotional management is crucial to the ability to focus on what matters most in the trade. For instance, planning, stringent rule following and keeping commitments are some emotional management skills you’ll want to hone.
There are those who would say that you should trade like a robot, meaning without emotions. They contend that, if you can do this you would be able to sidestep fear and greed. Well, if that were possible, you could avoid feeling any of the negative emotions that drive unwanted bad behaviors. However, what is also true is that you would be void of positive powerful emotions like inspiration, determination, joy, love and curiosity that substantially support decision making and good behaviors. Positive emotions lead to good decisions and behaviors that take you in the right direction, just as negative emotions lead to bad decisions and behaviors that take you in the wrong direction.
The research is clear that emotions govern decision making, not rational thought, despite what many think. Countless individuals contend that logic is what determines how and what they decide; but when you make a choice of which way to go on just about anything, especially important items like businesses, cars and houses, the final determinant is how you feel. So, while taking emotions out of the trading equation, you would allow you to avoid those pesky emotions like fear and greed, you would also not have the advantage of those wonderful emotions that assist you in making the right decision.
Emotions drive behavior, and the power of emotions and how they impact directly and massively upon what you do is very valuable. Consider just about every rule violation you’ve ever come upon; whether moving a stop, chasing a trade or whatever puts you and your account at greater risk of loss, aren’t fear, anxiety, greed and anger at play just before you engage in that rule violation? You felt the fear before you moved the stop; you felt the greed before you chased the trade; or you felt the anger before you exited the trade prematurely. Actually, emotions, just like thoughts, are energy. If you were hooked up to a fMRI, a functional neuroimaging procedure using MRI technology that measures brain activity by detecting changes associated with blood flow, the technicians would be looking at colored pictures of emotions, thoughts and other brain functions in real time. So, a big part of the trading process is emotional management or energy management.
Now let’s look a little closer at curiosity. It is one of the more potent and positive emotions. I would argue that next to love, joy and happiness, curiosity will serve you longer and in more situations. The satisfaction of quenching your thirst for curiosity can add greatly to your joy and happiness.
One of the maxims of the universe as we now know it is the ubiquity of information or intelligence or data. Data are at the quantum and classical levels of physics; from the sharing of information as in cellular communication throughout the body and brain to actions like photosynthesis (the conversion of light energy into chemical energy used as fuel by vegetation and other organisms). In other words, information and data are at the heart of everything…and that includes trading.
So, curiosity will help you tolerate the discomfort of both physical pain and emotional turmoil associated with fear, anxiety, greed, anger and the like. With curiosity you will yearn to see what happens if you allow the plan to implement as written, thereby increasing the information, the data. Through curiosity you will be open to the scientific method of trial and error to learn how various indicators and/or moving averages work. As you create consistency in cultivating and using curiosity you will develop the capacity for greater emotional strength and endurance to sit with the discomfort in whatever form it takes and remain there for the sake of achieving your highest and best goals. Once that happens you truly are on your way to becoming a highly successful and consistently successful trader.
Developing and using curiosity as a tool will allow you to learn more as you are intent upon finding out the why something will or won’t work. If you are learning more about both the trading process and yourself, you will put yourself in a position to do more as you are increasing your capacity to perform at ever higher levels of effectiveness and efficiency. In other words, you become more productive. Furthermore, it follows that if your productivity is increasing and you are more effective overall, then you are also in a position to be more. So, it is safe to say that you are expanding not only as a trader but as a human being.
At this point, you are no longer held hostage by the tyranny of certainty; that is, the phenomenon that takes place when an individual only has a hammer and everything looks like a nail, or when someone has a restricted number of alternatives that seem plausible to work then they are necessarily closed-off and limited in the ways that they can respond to that situation…they then have become tyrannized by the certainty of what to do. They have lost their ability to be flexible given that set of circumstances in that instance. They are doing the same thing over and over and expecting a different result! This is what we teach in Mastering the Mental Game online and on-location and courses. Ask your Online Trading Academy representative for more information. Also, get my book, From Pain to Profit: Secrets of the Peak Performance Trader.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD continues its downward trend for the fourth consecutive day, driven by a stronger US Dollar influenced by the hawkish market sentiment surrounding the Federal Reserve and expectations of prolonged higher interest rates.
GBP/USD: The first downside target is seen at the 1.2600–1.2605 zone
GBP/USD trades on a weaker note around 1.2620 during the early European session on Friday. The decline of Pound Sterling is backed by the growing speculation that the Bank of England will begin the rate-cut cycle this year.
Gold ends Q1 2024 at record highs, what’s next?
Gold is sitting at an all-time high of $2,236, lacking a trading impetus amid holiday-thinned conditions on Good Friday. Most major world markets, including the United States are closed in observance of Holy Friday, leaving volatility around Gold price highly subdued.
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple price has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days.
US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount
The core Personal Consumption Expenditures Price Index is set to rise 0.3% MoM and 2.8% YoY in February. The revised Summary of Projections showed that policymakers upwardly revised end-2024 core PCE forecast to 2.6% from 2.4%.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
Discover how to make money in forex is easy if you know how the bankers trade!
5 Forex News Events You Need To Know
In the fast moving world of currency markets, it is extremely important for new traders to know the list of important forex news...
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and...
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.