January 11, 2019 at 1:55 am #1507
Can feeling happy about successful trades have a negative impact on your next trade decisions?
My experience is it can.
A few times after a series of successful trades I’ve thought, now I finally get it and my trading is about to take off. Then after feeling something close to invincible I’ve ended up in another series of loosing trades where I give back my gains.
When this happened I needed to be honest with myself about what was going on. I was taking not great set ups or disregarding my trading plan altogether because I was in a euphoric state. The main drawback with getting excited about successful trades is starting to think you’re a better trader than you are and then disregarding your trading plan or making unplanned and unjustified increases to the risk per trade.
It was important to change my perspective so that I saw taking trades because I was feeling too happy about successful trades as a mistake that needed to be corrected.
It’s not that I don’t let myself feel good about successful trades, I do feel good about these but I’ve become suspicious of a thought like, oh now I get it and I’m a great trader and I don’t need to be so careful about taking the right set ups or being very consistent with my risk per trade. I’ve learned not to trust these kinds of thoughts.
In the last post I talked about not letting feelings about losing trades affect my trading decisions and it’s similar with positive feelings and successful trades. The thing that’s helped the most with sticking to a trading plan and not taking emotional trades, even ones based on positive emotions, has been time and the experience of repeatedly taking trades. There are a few other things that have been helpful as well though.
When I’m planning to enter a trade I like to think about the probability that other traders will also take this trade. The orders of most retail traders are not large enough to move the market. So if I want to take a successful long trade a lot of other traders need to be interested in buying at this price and holding or buying higher. So if I want to go long I like to ask myself do I think others want to buy here and are they likely to want to hold and are others likely to buy higher and are sellers going to step aside for a while in order for price to continue to move up.
The other thing I do before placing a trade is to try to look at things from the other side of the trade. Here is what I think is going on but what else could be going on? If the market shows me my idea about what I thought was happening is wrong at this point in time what else could be taking place. I find looking at the trade from more than one side, what I want to happen, tends to give me more perspective on the trade and even out the emotional aspect of trading.
It may seem counterintuitive to say feeling good doesn’t help with trading decisions and I’m not saying don’t feel good about your trading. I’m saying it’s helped me to be suspicious of feelings of euphoria about successful trades or the idea that I understand trading now and that I’m a great trader who doesn’t need to follow a trade and risk management plan. I enjoy trading and I enjoy successful trades but I also watch out for trading euphoria.
I hope this was helpful.
MicheleJanuary 11, 2019 at 8:18 am #1508
Thanks for the post Michele. I like this idea:
“It was important to change my perspective so that I saw taking trades because I was feeling too happy about successful trades as a mistake that needed to be corrected.”
I normally try to look at the charts in the both side: seller / buyer. And I also feel happy about trading because I always do my best whatever the result is good or bad. We can learn from both good or bad decision.
Please share more about some of your trading decisions (buy or sell). How do you define which trades are good or bad before enter?
Thanks & have a nice day.
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