Weathering Ups, Downs, and Ambiguous Trading Market Conditions
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Trading by nature lends itself to a series of ups and downs, and of course a multitude of ambiguous market conditions. When novice traders first step into the arena, their emotions run with the natural fluctuations of the market as well as the natural fluctuations that come with winning, losing, and having no idea what is going on. It takes a little experience to start weathering the variations and the fluctuations without having to ride out an emotional windstorm as well. With a little practice and a dedicated effort to change the emotional impact, anyone can learn how to view the experience as a job and not an emotional breakdown waiting to happen.
No matter how long you play the game, trading presents numerous challenges and even those who have been successfully trading for more than a decade often find that their emotional reactions still sneak up on them from time to time. Combating this tendency isn’t that difficult, but you do have to have a coping strategy to bring yourself back down to a more unemotional response. When you pull it together and watch a risky trade pay off huge, it is normal to get a little happy. When you watch a sure thing tumble down into the abyss of no return, it is normal to get a little disappointed. The key is to take you emotional reactions and give them their space, and then make trading decisions without their influence.
Some traders simply write it down. Whether you choose to jot down your emotional response and leave it on the paper during your work day or you prefer to jot down your next move and reflect upon it in print to make sure there isn’t an emotional element factoring into the decision, when pen meets paper, progress can often follow.
Trading most often performs in cycles. You might experience a winning streak only to break even or lose during the next cycle. If you allow your emotions to filter through each and every event, you are going to be exhausted by the end of the day, and burn out isn’t too far around the corner. When you practice more rational trading, you tend to view the entire picture rather than the moment to moment experience.
Practicing cautious risk management, especially while you are still developing your fledgling skills, also helps you practice good practical trading without emotional influence. If you have a huge amount riding on a single trade, your emotions are going to be pulling for a strong finish. When you have a little bit dealing over here and a little spread out over there, your emotional investment is much more tolerable and you don’t have to sweat the losses or pray for the big wins.
Take your time, use your head, and don’t allow either a winning streak or a losing streak determine whether you are going to commit to your trades. Have faith in yourself and have the knowledge to know that when you are winning or losing it just isn’t long before the tides change.
The goal of trading is financial gain. Keep your goals in front of you and keep your emotional involvement to a minimum through strong risk management skills and you should be able to use logical reasoning to bring your game to the next level. Just like any other high, sooner or later you are bound to crash. Don’t trade on a high for the sake of the high. You’ll be penniless and burnt out within a year if you trade on highs for another high.
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