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Emotions and its Influence to Online Trading

Emotions can be related to watering the plant and this is important because plants need just the right amount of water to grow. Too little and too much might cause it to die. Emotions can be analogous to the watering can and the water that is held inside is the money that you put into trading with your brokerage account. How much you pour in will depend on your intuition. How you feel, your emotions and your mood contribute to how you trade and the analogy is you can trade too much or too little and that can cause your account to blow out.

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In this article we will discuss what the right emotions for you to be able to have a good mindset and attitude.

Indirect Influences

Sure your methods might be proven to be profitable but throughout the whole process, you can still commit mistakes if you don’t have a clear mindset. You might involuntarily take a lot of probability trades or take unnecessary risks that you shouldn’t have. There’s even a chance that you might break your money management and blow out your account when you going into session without a clear mind and not thinking properly. It doesn’t directly influence how you invest, it’s basically the trade execution or the step right before you make the execution which causes you to make inefficient decisions.

Direct Influences

Detaching yourself from the value of money is highly recommended especially for those who have lost a lot or when fear has kicked in when doing these types of transactions. The disadvantage of fear is that it makes you avoid taking risks or grabbing the opportunity to earn. It also has some other tendencies which can cause you to overthink certain scenarios. Remember that being careful is essentially good but being too careful to the point that you miss the chance to earn profits is not good. This gives you the tendency to enter late for no reason when paranoia kicks in. You second guess yourself thus delaying entry which should have been done earlier to make better yields. Let’s say after 10 minutes of thinking you finally decided to enter because you believe that there is a good chance but then it’s too late because you are already in the low probability zone. This leads to dealing less than normal.

Greed on the other hand is the opposite of fear but can also be a direct influence and influences you to do things that you don’t normally do. And once the money takes over, it’s already game over for you because your emotions are already controlled by the desire to earn more. Greed comes in 2 forms: anger and happiness. Anger comes from the feeling of losing and the need to recoup your losses. Happiness comes from the feeling of gaining or winning but with greed you will tend to want more and invest more, taking what you shouldn’t be taking.

Another emotion that has a direct influence is anger. Let’s say you had an argument with someone or you’re losing a lot of your investments. This could lead you to get into a rage mode wherein you’re basically going to make a lot of careless mistakes. In relation to poker, this is called “going to tilt”, meaning you are just more prone to mistakes once you get into this zone. The best solution to this is to catch yourself slipping and stop the process before more mistakes are done.

Happiness is another direct influence because you will most likely to be optimistic about every set up. This however could push you to use your capital more and more which can result in another change of mood but on the positive side, you are not stressed and you mind will be able to think clearly giving you the ability to differentiate a good and a bad set up. Happiness may be the best state to be in but always remember not to overdo it because too much optimism will blind you from selecting only the good ones.

Solutions

So what are the solutions to these influences? If you’re able to catch yourself slipping then the best solution is to stop the deal and don’t let the emotions take over. Maintain the same mentality all the time, stay calm, clear minded and everything will be done in just a breeze. It will be easy if you stay calm and neutral when placing trades.

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