Taking the Emotion Out of Trading

If the key to successful trading is a disciplined approach —
developing a trading plan and sticking to it — why is it so
hard for many traders to practice trading discipline? The
answer is complex, but it usually boils down to a simple case
of human emotions getting the better of them. Don’t under-
estimate the power of emotions to distract and disrupt.
So exactly how do you take the emotion out of trading? The
simple answer is: You can’t. As long as your heart is pumping
and your synapses are firing, emotions are going to be flowing.
And truth be told, the emotional highs of trading are one of the
reasons people are drawn to it in the first place. There’s no
rush quite like putting on a successful trade and taking some
money out of the market. So just accept that you’re going to
experience some pretty intense emotions when you’re trading.
The longer answer is that because you can’t block out the
emotions, the best you can hope to achieve is understanding
where the emotions are coming from, recognizing them when
they hit, and limiting their impact on your trading. It’s a lot
easier said than done, but keep in mind some of the following
to keep your emotions in check:
Focus on the pips and not the dollars and cents. Don’t
be distracted by the exact amount of money won or lost
in a trade. Instead, focus on where prices are and how
they’re behaving. The market has no idea what your
trade size is and how much you’re making or losing, but
it does know where the current price is.
It’s not about being right or wrong; it’s about making
money. The market doesn’t care if you were right or
wrong, and neither should you. The only true way of
measuring trading success is in dollars and cents.
You’re going to lose in a fair number of trades. No
trader is right all of the time. Taking losses is as much a
part of the routine as taking profits. You can still be suc-
cessful over time with a solid risk-management plan.