Dealing With Negative Trading Emotions

No matter how calm and ‘centred’ you are, the market’s going to p*ss you off occasionally. The sooner we just accept that the better.

We can’t eliminate emotion, we can’t trade like a robot, so we better get used to dealing with these little jabs from time to time.

If all traders experience these, what separates the winners from losers? How you respond.

Let’s pick an example:

• The market has a nice move in your direction, you’ve held the trade well, and are holding a decent size.
• It approaches your limit to exit and all of a sudden reverses hard on unexpected news and rips back stopping you out.

That’s annoying whichever way you package it. How could you respond?

New trader response:

Damn it! That’s so annoying I’m going to find another trade right away to make that money back that I just missed out on.

Cue revenge trading and a shift in trading approach triggered by the emotion.

Experienced trader response:

Damn it! That’s so annoying.

Emotion dissipates, back to normal flow.

Move on.

One trigger. Different responses.

How you frame the event is the separator.

How you frame setbacks, drawdowns, stopouts, bad luck, platform outages, and missed fills is the difference between the beginner trader being ruled by emotion and the experienced trader still feeling emotion, but framing it differently.

You have probably heard of Joko Willink – ex-Navy Seal and all-round double-hard dude. He sums up how to deal with setbacks perfectly in this 2m video.

So, next time the market annoys you or frustrates you, try and remember:

“How I respond to this emotion is the separator”

“I feel frustrated, GOOD. That means I get to improve my response to it and join the winners”

Just that subtle shift in thinking makes so much difference. Try it and let me know if it helps.