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Thread: When we are emotional we cannot be logical, when we are logical we cannot be emotional

  1. #1
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    When we are emotional we cannot be logical, when we are logical we cannot be emotional

    This thread is my own way of thinking and all critics are welcomed. What I think is if we trade logically we do not trade emotionally and when we trade emotionally we will not trade logically. Because logically thinking will not allow us to trade emotionally and when our mind is filled with emotions like greed, fear, we will no more be able to make sound and logical decisions.


    Keeping one will remove the other
    : So from the above discussion it is clear that we cannot be logical and emotional in trading at the same time. What is important in trading is we give up our emotions and make sure that our trading decisions are always logical and with sound thinking. When our mind is disturbed with the effect of emotions like greed and impatience then we will make all sorts of drastic mistakes and face severe losses.


    Avoid emotions to follow logical plans and trading systems
    : The main reason why even good strategies and well laid logical plans fail is due to the interference of emotions. A trader under the effect of emotions will disregard all his plans and trading rules and make all sorts of mistakes. And so emotional trading is a big hurdle that attracts losses and failure.


    Psychology training for emotional free trading
    : So a trader should learn to train his psychology so as to overcome the harms of emotional involvement in his trading. We cannot get this training from the demo account. This trading has to be from the experience we get in real trading. We have to review our trading from time to time and this is surely going to help us a lot for our psychology training and in all aspects of trading.

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  2. #71
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    The accessibility of leverage will entice you to utilize it, and in the event that it neutralizes you, your feelings will burden your basic leadership, and you will likely lose money. The most ideal approach to stay away from the majority of this is to build up a trading plan that you can adhere to, with techniques and procedures you've tried and that result in beneficial exchanges at any rate 50 percent of the time. Indeed, not just should you have a trading plan, however, you should keep a forex trading diary also to monitor your progress.

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  3. #72
    Trader J_C_Anderson's Avatar
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    It is extremely important for the trader to make his decisions based exlcusively on strategy rules rather than on emotions. Of course, it is almost impossible to eliminate the impact of emotions at all, but it is possible to reduce it. First of all it is important to understand the reasonwhy emotions influence your trading. Sometimes it happens just because trader lacks confidence. In this case he is more likely to act under the impact of emotion making such mistales like closing profitable positons too early, holding losing positions too long or just making emotional trades that violate strategy rules.
    At the same time, if the trader would know that his strategy is profitable and the only thing he needs is just to follow its rules it would be easier for him to be disciplined enough. There few ways to check the performance of the strategy. The simpliest one is to test it manually using demo account. It is most affordable way, but it is very time consuming, while its results are quite often inaccurate. To my mind, it is better to test strategies using special software like Forex Tester to perform backtesting. The main difference of backtesting is that it utilizes historical data. Backtesting process is fully automated, so trader`s psychology would have no impact on its results. At the same time, demo testing is important too, so trader should combine both these approaches.

    Each trader has to deal with emotions in his trading process and there are no easy way to manage with them. Thus, trader should be disciplined enough - in this case, the impact of emotions would be minimized to the lowest possible level. Of course, it takes a lot of time to become disciplined enough, but it is necessary for anyone going to succeed in trading.

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