Finschool By 5paisa


Controlling Emotions While Trading

By News Canvass | Sep 20, 2021



Emotions are the most significant stumbling block to trading success, but we still let our emotions control our trades, resulting in large losses.

When we rely on our emotions, we can make mistakes for the wrong reasons, such as buying a stock with the expectation that it would rise. When it doesn’t move up, though, we cling to it for the sake of our ego. Accepting that we were wrong is difficult for us. There are a plethora of examples of this type.

You are your own worst enemy. That sounds as mundane as it does ambiguous when we say it. However, it is also very true. The three most crucial parts of effective trading are psychology, strategy, and money management (mastering all three is a requirement for every good trader). But here’s the thing: you might have a perfect approach because you’re a naturally analytical person who’s spent hundreds of hours learning about technical analysis and studying the market but your emotions and how to control your emotions while trading determines your success.

The only way to trade successfully and guilt-free is to regulate your emotions. Hope, greed, fear, and regret are the four emotions that traders are concerned with. It is necessary to suppress these emotions in order to be satisfied and successful. After conducting extensive research, Making the trading process more mechanical is the most effective method to control emotions. Mechanical here refers to making trading actions mechanical rather than relying solely on tools or software.


1] Selling at a loss at the worst possible time.

2] Fear of missing out (FOMO) and buying at the top.

3] Being greedy and taking on excessive risk.

4] Excessive trading and several trades due to boredom, FOMO, or greed.

5] Fear of being wrong prevents you from trading when an opportunity arises.

6] Believing you’re invincible following a string of unbroken trades, only to discover the hard way that you’re not.


Try asking yourself, “Why am I selling?” to see if you’re in command. “Why won’t I sell?” “Why did I start this trade to begin with?” “Why would or wouldn’t I make this trade?”

You are not in control if any of the answers are motivated by fear, greed, impatience, or boredom. And as a result of those hasty judgments, you may suffer significant losses. Because our emotions are so strong, it might be difficult to identify who is in charge until we begin to think rationally, by which time the harm has already been done.

Here are some tips you can follow to control your emotions:-

    • Before you attempt your next trade, take a few moments to consider whether this is the appropriate thing to do or if this is exactly what you should be doing. Examine your chart carefully and consider what a professional would do in similar circumstances. This brief pause can occasionally turn the tables in your favour.
    • Early entries and misleading indications might leave traders in a bind. So, before making any decisions, wait for a candle. This could help you perform better as a trader. I’m sure you’ll find this concept challenging when you try it out, but that’s how you’ll learn how emotions influence your decisions.
    • Mid-candle judgments are almost often spontaneous, as proven by experience . It is always advisable to the new traders not to make mid-candle decisions as it may severely affect them. You will be able to witness for yourself how you are a victim of impulsive trading decisions once you employ this strategy. If you wish to control your emotions during trading, try making decisions candle by candle.
    • Making a list of all the entry criteria is a great strategy to avoid making emotional decisions. Make a list of the entry requirements and have it accessible near you. This assists you in developing mental discipline.
    • You won’t go anywhere near success if you don’t believe your system and ability and stick to a consistent strategy in everything you do, not just trading. Move forward after being clear and explicit about your trading rules and approach. When we are influenced by the opinions of others, we may change our best rules. At all costs, this must be avoided.
    • Opinions are important, but only if you do your study and grasp both sides of the issue. It is not reasonable to rely on it solely because it seems interesting. When it comes to trading, relying on other people’s opinions might be detrimental at times. If you want to trade with confidence, Avoid listening to other people’s opinions.

While we can blame a lot of losing trades on our inability to control our emotions, we can’t blame every loss on emotions. However, if you can keep them under control, it will be easier to spot other problems and continue to progress. It’s difficult to fight your natural inclinations and reactions, but with enough practise and persistence, you may start to regulate your emotions when trading.

View All