Traders Can Be Affected By Emotions
It is common knowledge that whatever happens, you do not trade stocks based on your emotions. The reason is simple: if you let your emotions guide your trading decisions, you could simply end up broke because you will do things based on something arbitrary and fleeting.
That being said, what do we usually do so that our emotions will not run the show? Well, there are many things that we can do to manage our trading brokers.
Sometimes, we are told to get out of trading and something else for a while until such time that your emotions are not running the show.
Well, to be honest, this advice kind of works, but it is really not something that can solve the issue here. The problem is that the stock market usually gives a trader a different set of emotions depending on what happens after the trade.
If we win, our emotions are high and we typically find it exhilarating to trade again because we automatically think that we might win again because of the good fortune you’ve experienced.
However, as you probably know by now, the stock market is never a constant thing. Sure, you could win probably 2 trades in a row, but this is not an indication that “all of the stars have aligned” for you. It just so happens that with your knowledge and timing that you were able to gain profits in just those two tries.
How about if we flip the switch and you’re losing? What if you’re losing so much money because the trades that you thought would rack you some money, ultimately gets so bad that you’re losing a lot of cash in the process?
That is a real bummer and when people experience that, they usually tend to be frazzled and will make decisions that will push them down so hard that they lose a lot.
There are just some people who do not compartmentalize their thoughts. Yes, you could potentially lose profits on a trade or two because, to be honest, no one really wins in the stock market 100% of the time. But, for some people, one loss could prove to be something that is too insurmountable to overcome.
So, what are you to do in such a situation?
An Interesting Discovery
When you do different things or just about anything that doesn’t involve trading, we sometimes forget about our losses or negative trades. However, that just gives you a temporary reprieve from the situation. This is not to say that this doesn’t work; it does. However, it just doesn’t work for everybody.
So instead of doing things other than trading, why not do some trades but without actually trading? It may sound counter intuitive, but hear me out. What I am saying is instead of actively trading, you just hold your shares for a long time and not ever think about it.
You might not earn a lot of profits compared to when you actually engage in active trades, but doing so involves only a small risk.
So again, instead of doing other things, why not try trading passively? Who knows, this approach might be better for you.