Page 38 - Psychology Course Study Manual

So, while a trading system or approach is important, so is money management and learning

how to manage your psychology. It will take time, experience, and dedication to overcome

your human and all too common short-comings which we all have. This is why 90% of the

traders lose trading in the financial markets. We all are subject to fear and greed, but only a
small percentage of traders can manage their emotions well enough to let themselves win.

HOW TO HANDLE YOUR EMOTIONS WHILE TRADING

To be successful you must learn how to master your emotions and be able to stay calm when

trading. Emotions mishandled by the trader can negatively affect their trading. Let’s take a look

at how we can handle our emotions without denying them.

We cannot turn our feelings on and off like a light switch, it just is not that easy. As human

beings we get into trouble with our feelings when we deny them or try and hide from

them. This quick solution of denying our feelings usually cause the individual to have bigger

emotional problems down the road. You can’t sweep your feelings under the carpet forever;
eventually you have to clean under that carpet! So how do we control our feelings without

denying them? This is the real question!

Well the answer is multi-dimensional. First of all, if you get frustrated or angry at being
stopped out at a loss or when you’re experiencing draw down, then your expectations need to

be adjusted. Being stopped out is a normal part of trading. If you get stopped out more than

the norm, you need to know how to go about correcting the problem. Maybe you need to
switch time frames, lower your position size, etc. That is the “art” of trading, it is not an exact

science, and there is a lot of judgment and discipline that come into play here. If your

expectations are realistic, then chances are your trading should not make you angry or

frustrated.

Perhaps your frustration, anger, depression or whatever is causing your emotional problems

has nothing to do with trading. Maybe it has to do with a relationship not going well, money