Emotional pain threshold
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  1. #1
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    Emotional pain threshold

    Hi traders!

    Everybody admits here that emotions have impact on our trading. Emotions are natural for us as human beings, yet when we reach certain emotional pain threshold, we are unable to tolerate them and start doing something harmful for our trading– to avoid unbearable discomfort/pressure. It’s a point, when we are no longer acting in our own best interest, and we are not "trading" actually - we are pushing buttons to close old positions and to open new ones.

    Every trader has his own certain emotional pain threshold. Some traders have low level of it, it makes them vulnerable for paper profits and losses. Obvious advice in this case could be – "exclude emotional factor by switching to higher timeframe or lowering risk size or both".
    But let me explain the process of discretionary trading. Every trader needs some emotional stimulus to act and make decisions. Every trader has his own level of stimulus, and it can measured in frequency of incoming information and volatility of chosen market as well as accepted risk.

    If stimulus is not enough, trader will tend to make mediocre decisions – he will not be able to capture brilliant trade locations, clearly see destination of the market and eventually – make good trades.

    If stimulus is overwhelming (frequency is too high, risk is also too high), trader will tend to cross his emotional pain threshold when frustration and disappointment (they are natural for trading) will reach some level. It will lead to losing focus and control – on the surface trader may breathe deeply to adjust his heart rate, he may practice positive self-talk, but on unconscious level his perception will be broken – trader will watch the market through narrow frame of mind, and of course, he will just see one element of the whole picture. Decision he makes in such state of mind, will tend to be not efficient and therefore – less likely profitable. Even if trader was right in identifying destination – he will manage his position poorly and, for example, set too close stop loss – market will wipe him out of the position.

    Some people naturally have low level of emotional resilience (low emotional threshold level) and they have high level of «neuroticism», like Dr. Brett Steenbarger wrote in his book «Enhancing trader performance». For them, day trading on small timeframes will be very tough – pressure will be so high that they would be unable to keep required focus.

    But its not just natural emotional level of resilience that is needed for good trading. Trader should as long as possible operate from neutral position («observing ego»), he has to have sort of special peaceful place in his mind, where he will operate from. Not identifying ourselves with our emotions is important thing that will help us stay in this peaceful «place».

    The more holistic our mind is, the more ability we will have to keep our attention in meta position, observing our emotions from outside and being able not to identify with them.

    This ability is called «Self-awareness». The more self awareness you have, the more control you have over your actions. And good news that this ability can be increased and developed.


    Good luck and be self-aware!

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    till now, i still have the problem with the emotion and especially at bad situation, but today is better than yesterday or several years ago when i can not control the emotin and just faced some losing for every weeks at this business, need a time for me to learn how to control the emotion, need a time for me to make a good habit and bring it to this business, this is the process which i have to take right now

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    Registered user dkarev's Avatar
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    Quote Originally Posted by tenak View Post
    Emotions are very important in forex trading. Many trader who trade in this market they loose their money in this market due to emotional effect.so if we want to get success in this market then we should control our emotions during trading and we can trade with patience and we learn how to control our emotions.
    that is true,many has struggle to make something from this business of forex trading due to their emotion when trading,though as a human we are bound to get emotional to anything we might be doing but the ability to control when trading forex makes us a better trader,to control emotion is not always easy atimes.

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    In forex trading business many has struggle to make something from it ans it is very true.We are humans and we are bound to get emotional on some points but it is more important to control your emotions while trading and it will make you better trader.But to control our emotions it is not always easy job and we face losses during a times.

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    Rookie Azis Muslim's Avatar
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    Quote Originally Posted by newentry View Post
    till now, i still have the problem with the emotion and especially at bad situation, but today is better than yesterday or several years ago when i can not control the emotin and just faced some losing for every weeks at this business, need a time for me to learn how to control the emotion, need a time for me to make a good habit and bring it to this business, this is the process which i have to take right now
    Though we already known and traded in forex for many years, we will face some problems caused by bad emotion sometime and I think it is common thing for traders. But, now we can easily control it or avoid it better than the last time we face the same problem when we were still new to this forex trading. Same like me sir, I sometime face bad emotion in various situation such as greed and panic.

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    Some of what i read u there are true, why some are questionable. It is true that we are all human beings, and it is natural that we are emotional. But the truth of traders difference in in the gene, that is why the level of the emotion are varying among traders, the way to do without it differs by this as well. Try to know yourself, and make the necessary adjustments as you are capable of doing it.

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    I think emotions are very important in forex market and they has great impact on forex trading.Many people who trade in this market they face losses due to emotional effect. Due to emotions they get big lot size entry they loose their money.so If we wnat to get success in this market than we should control our emotions during tradng.

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    Quote Originally Posted by tenak View Post
    I think emotions are very important in forex market and they has great impact on forex trading.Many people who trade in this market they face losses due to emotional effect. Due to emotions they get big lot size entry they loose their money.so If we wnat to get success in this market than we should control our emotions during tradng.
    you have made a right point. Emotion is a very important factor that can determine the success or failure of any forex trader and that is why traders should not only practice on a demo account where there is no real money but also learn on a cent account to learn the emotion of trading with real money.

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    emotions are indeed very dangerous for a trader because only due to these emotions a traders makes a lot of mistakes due to which he faces the losses and it is also not that easy to control the emotions, i must say that emotions are also a part of forex trading and can not be get rid of.

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    Registered user taqiniazi's Avatar
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    In currency dealing company many has battle to create something from it ans it is very real.We are people and we are limited to get psychological on some factors but it is more essential to management your feelings while dealing and it will create you better investor.But to management our feelings it is not always simple job and we experience failures during a periods.

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