In the first it seems easy, when one wins one tends to be happy, then one could say that there would be no emotions that could negatively affect me, since I would agree “good humor”. Although this can happen, it is a double-edged sword, since one can tend to get carried away by a bias that this scenario will always be repeated and enters to play greed, the famous “one more” that unfolds in a loss elderly.
On the other hand, when one loses, by nature the human tends to wonder if things were wrong, “What was I wrong about?”, while in a hypothetical case where I make money with an investment, we don’t usually ask ourselves that. The stimulus of having a negative result leads us to the thought that there is something to correct without a doubt. But this is not necessarily true. When you operate, you must keep in mind that 100% of the operations will never be positive, this means that we will have a certain % of the operations in which we will lose money. And so are the rules of the market. In summary, We may have lost money, but it does not mean that things were done wrong, if we have a tested plan that is profitable, it ends up being only statistics.
The important thing is to be aware of the factors that concern us, each individual is affected by emotions within the operation in different ways. Then it is essential to identify these emotions that we experience. As an exercise, I recommend writing them by hand. Let us know what things make us lose control and what things keep us within it; and from there that will give us the foot to work on this control we are talking about. It is impossible to put emotions aside, we are human, we are not machines. What we can do is control them. The moment we feel that an emotion conditions our decision-making when it comes to trading, and we end up not following the guidelines that we have established, that is where we have to put a brake and reflect. Am I wanting to enter the market because my guidelines tell me to? Or am I buying/selling solely out of revenge/anxiety/fear of the market? Whatever the answer to these questions, we have the opportunity to correct and improve.
It is always essential to be informed of the asset that we are operating, the variables that condition it and why. A very common emotion is when certain movements occur in the price of the asset in question, and we do not know why they have occurred, then we lose our cool. While not everyone has an explanation, the vast majority do. By being calm about the decisions we make, the way to improve is completely paved. Ergo, it is always recommended before investing in any type of asset, to analyze it in detail. If one makes the decision to invest in it and thinks that it can be valued over time, it should not be affected by a sudden drop.
Like any profession, activity, sport and/or task, among others, one needs time and practice to be able to master it. And the control of emotions within trading and/or operations in the financial markets is no exception. We are always facing decision-making scenarios. But in order to always make the right one, you first need to make mistakes, experience decision-making correctly and incorrectly. For, in the future, maximize what are rational decisions over emotional ones. Most of the mistakes an average trader makes are more emotional than technical. Ergo, if we learn, step by step, to control them, it will cease to be a question of whether one will achieve results or not and will become a question of when it will happen.
Crypto & Financial Analyst at N&W Professional Traders.
Source: Ambito
