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Emotions (money management)

  • #81
  • Apr 24, 2017 6:18am Apr 24, 2017 6:18am
Quoting Grabowski
{quote} No one has never lost a $ because of emotions. If you act on your emotions, that's when you lose money.
I am not sure I understand the difference. In end, one loses money because they make a poor decision because they're emotionally affected, hence they lose money because of emotions?
  • #82
  • Apr 24, 2017 11:14am Apr 24, 2017 11:14am
Quoting mlawson71
{quote} I am not sure I understand the difference. In end, one loses money because they make a poor decision because they're emotionally affected, hence they lose money because of emotions?
It is naturally to feel bad when you lose money or have many losing trades in a row. But if you keep denying your emotions (because you were told that you need to trade without emotions), then the emotions will amplify and might cause you to overtrade or revenge trade, because you are acting out your emotions. However, if you welcome these emotions and thoughts, you create a space between them and the actions/errors you will make.

Does that make sense?

If you want a more in-depth answer, I will suggest you look more into mindfulness in general.
  • #83
  • Apr 25, 2017 6:38am Apr 25, 2017 6:38am
Quoting Grabowski
{quote} It is naturally to feel bad when you lose money or have many losing trades in a row. But if you keep denying your emotions (because you were told that you need to trade without emotions), then the emotions will amplify and might cause you to overtrade or revenge trade, because you are acting out your emotions. However, if you welcome these emotions and thoughts, you create a space between them and the actions/errors you will make. Does that make sense? If you want a more in-depth answer, I will suggest you look more into mindfulness in general....
That certainly makes a lot of sense. Thank you for clarifying.
  • #84
  • Apr 25, 2017 10:18pm Apr 25, 2017 10:18pm
I think, your money management skill is that which makes you remain in the market. A trader that finds it difficult to manage his capital funds himself out of the market sooner than he expects. It doesn’t come easy and the skill required in risk management is one that grows with time.
  • #85
  • Apr 27, 2017 2:01am Apr 27, 2017 2:01am
Controlling emotions is most essential. Along with that you need to have money management techniques, proper trading plan and due knowledge about the market. Proper set rules for your trading plan can help you combat emotion out of your trading. And as above said, money management is most essential and helps keep your money in control, which ultimately will lead to emotional control.
  • #86
  • Apr 28, 2017 5:58am Apr 28, 2017 5:58am
Quoting mlawson71
{quote} Frankly, the only thing that worked in the end for me was gaining experience. The more I traded, the number I became. And even so, the truth is that I still have moments when I am not calm and cool-headed. What works for you?
Exactly! This works. Even I am constantly learning to control emotions by acquiring knowledge and practicing it in my trading. Sometimes when I break down i turn off my laptop and go for a walk. It cools down my heightened emotions and I get back on the bar again.
  • #87
  • Apr 28, 2017 6:45am Apr 28, 2017 6:45am
Quoting wattsema
{quote} Exactly! This works. Even I am constantly learning to control emotions by acquiring knowledge and practicing it in my trading. Sometimes when I break down i turn off my laptop and go for a walk. It cools down my heightened emotions and I get back on the bar again.
That's what I do too, sometimes. Turn everything off and go out to clear my head. I think that it is important to emphasize to newbies that they shouldn't stare at the charts all day, even if they're successful. One should sometimes just rest their eyes and their mind from trading.
  • #88
  • Apr 28, 2017 9:41pm Apr 28, 2017 9:41pm
People blame emotions and "money management" for their losses when the core problem is that their strategy isn't effective. Virtually all strategies passed around this forum are based on what amounts to sorcery and fortune telling and have no basis in reality. When you find a strategy that you know is based on market reality, then you can blame emotions like fear (especially) for cutting off your winner early or making you move your stoploss to break even prematurely. Until then, emotions are the wrong thing to focus on as the primary account killer.
  • #89
  • Apr 29, 2017 6:44am Apr 29, 2017 6:44am
Quoting Kanzler
People blame emotions and "money management" for their losses when the core problem is that their strategy isn't effective. Virtually all strategies passed around this forum are based on what amounts to sorcery and fortune telling and have no basis in reality. When you find a strategy that you know is based on market reality, then you can blame emotions like fear (especially) for cutting off your winner early or making you move your stoploss to break even prematurely. Until then, emotions are the wrong thing to focus on as the primary account killer....
I don't think that anyone thing they're the primary account killer, though they are one of the many factors in that situation. Even if you have a good, profitable strategy, if you are too scared and/or greedy to follow it as you should you'll lose money.
  • #90
  • Apr 29, 2017 10:24am Apr 29, 2017 10:24am
Quoting mlawson71
{quote} I don't think that anyone thing they're the primary account killer, though they are one of the many factors in that situation. Even if you have a good, profitable strategy, if you are too scared and/or greedy to follow it as you should you'll lose money.
Mlawson71, I agree. One can have a perfect strategy that would make money in the long run, but fail to follow the strategy because of the traders mindset. If I had to choose what comes first, mindset or strategy? I would say mindset, and then strategy. Mainly because, if you have the right mindset, you will eventually get a strategy that is profitable. Trading is such a foreign field for most of us emotionally, that I think the biggest hurdle is the mindset and the willingness to adapt.
  • #91
  • May 1, 2017 6:47am May 1, 2017 6:47am
Quoting Grabowski
{quote} Mlawson71, I agree. One can have a perfect strategy that would make money in the long run, but fail to follow the strategy because of the traders mindset. If I had to choose what comes first, mindset or strategy? I would say mindset, and then strategy. Mainly because, if you have the right mindset, you will eventually get a strategy that is profitable. Trading is such a foreign field for most of us emotionally, that I think the biggest hurdle is the mindset and the willingness to adapt.
That was very well-put. The proper mindset and the discipline have to already be there when you develop or learn a profitable strategy. Otherwise it'd be useless.
  • #92
  • May 15, 2017 2:49am May 15, 2017 2:49am
Quoting gabanda
{quote} in carrying out the most important trading we always run trading by learning on the run, because the forex business is a very risky business. For that try always to strive to learn as in the demo account or demo contest of broker instaforex to improve the ability to better facilitate trading in the running of his trading in real account later
Learning is the very aspect of forex trading and is rightly said that always trade by learning on the run. Learning while trading can provide you with actual imprint of the market and makes you understand practically what have you learn. Together gaining experience along with learning is much more beneficial or you can say effective than mere having theoretical knowledge.

  • #93
  • May 19, 2017 3:20am May 19, 2017 3:20am
Quoting mlawson71
{quote} That's what I do too, sometimes. Turn everything off and go out to clear my head. I think that it is important to emphasize to newbies that they shouldn't stare at the charts all day, even if they're successful. One should sometimes just rest their eyes and their mind from trading.
Absolutely! It is necessary to take your mind off from trading sometimes. People go insane watching charts and end making a hasty move.
  • #94
  • May 19, 2017 8:59am May 19, 2017 8:59am
Quoting wattsema
{quote} Absolutely! It is necessary to take your mind off from trading sometimes. People go insane watching charts and end making a hasty move.
I don't know about going insane, but the risk of burning out emotionally is very real. It exists with every job, really, trading is no different.
  • #95
  • May 19, 2017 11:28am May 19, 2017 11:28am
Quoting mlawson71
{quote} I don't know about going insane, but the risk of burning out emotionally is very real. It exists with every job, really, trading is no different.
Indeed. It is what brought me to trading in the first place. I already saw myself selling currywurst on the streets and on festivals (I make a fantastic sauce!). I was in my late twenties and I was totally burnt out from running an engineer office - customers, business partners, investors ... you guys really think trading is hard and stressful? I've never lived better and more relaxed than I do now. I can sleep through the night, I can wait somewhere without internet/cell phone reception for hours without going crazy that s.th. might go wrong in the company, I'm not worried about competition anymore or 1001 things I can't control.

My advise regarding emotions fooling you into revenge or boredom trades: talk to yourself. It really helps if you hear the nonsense that is happening inside your mind. I once stopped smoking (long ago) and at some point I found myself thinking "you haven't had a fag for 14 days, you should reward yourself with one". The sober part of my mind was like "really?! Jens listen to yourself, you're going bonkers".
  • #96
  • May 19, 2017 11:39am May 19, 2017 11:39am
Quoting mlawson71
{quote} I don't know about going insane, but the risk of burning out emotionally is very real. It exists with every job, really, trading is no different.
i've been on FF for +10 years..

i've seen members going insane. going off the wheel, negative projections, stupid random posts/threads..

it's real man..

i keep myself sane with the gym and spiritual moments..

also doens't hurt to have blunts from time to time...
  • #97
  • May 19, 2017 5:48pm May 19, 2017 5:48pm
You know what's the best way to avoid emotional distress? To trade with the money you can afford to lose. When you trade with hard earned money, or the money you lended from the bank, the emotions are gonna destroy you. You can not act like a robot when very important money is at stake.
"Don't lose your cool, and you will fare well".
  • #98
  • May 19, 2017 6:28pm May 19, 2017 6:28pm
Quoting diana91
When you trade with hard earned money, or the money you lended from the bank, the emotions are gonna destroy you. You can not act like a robot when very important money is at stake.
It is of course impossible to disagree with that, I still think/talk from my own experience, that the problem is a bit more complicated. Even when you have enough in the bank to survive a few years, even when you know you can easily live off your rather safe rental income from your completely paid houses it is still an emotional trouble when you see your position is increasing or decreasing by 200 bucks per pip or more. My solution was to hide that money column (I already mentioned that a few times here).
Your argument makes perfect sense from the logical financial side but it doesn't address the perceived value of that money and the permanent visibility of the P&L (which is unnecessary for most trading systems anyway) in many trading applications is a constant reminder.
  • #99
  • May 20, 2017 6:47am May 20, 2017 6:47am
Quoting hilmy83
{quote} i've been on FF for +10 years.. i've seen members going insane. going off the wheel, negative projections, stupid random posts/threads.. it's real man.. i keep myself sane with the gym and spiritual moments.. also doens't hurt to have blunts from time to time...
That's really unfortunate. I hope those people are better now.
  • #100
  • May 21, 2017 10:01am May 21, 2017 10:01am
Quoting mlawson71
{quote} That's really unfortunate. I hope those people are better now.
They will feel more better if they set their emotions out from trading, IMO!
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