How to control your emotions while trading in the market
Controlling Emotions in Technical Analysis Trading:
Defined Technical Analysis Strategy: The foundation of emotional control in technical analysis trading is a well-defined strategy. Knowing your entry and exit points, along with technical indicators, can help you stick to a rational plan even in volatile moments.
Risk Management Using Technical Indicators: Set clear risk levels based on your chosen technical indicators for each trade. For example, you might use support and resistance levels, Fibonacci levels, bands, or other technical tools to set stop-loss orders and take-profit points.
Discipline in Technical Entry and Exit: Stick to your technical analysis plan. Don't deviate or chase trades based on emotions. Let your technical indicators guide your decisions rather than feelings.
Utilize Technical Stop-Loss Orders: Implement stop-loss orders based on your technical analysis to automatically limit losses when a trade goes against your technical signals.
Stay Informed with Technical Analysis Tools: Keep up with technical analysis signals and price movements, but don't let sudden price moves or emotional reactions dictate your decisions. Always rely on your technical analysis strategy and indicators for making informed trading decisions.
Patience and Technical Timing: Use technical analysis to identify the right technical setup or entry point. Waiting for confirmation from your chosen technical indicators can prevent impulsive trading decisions.
Psychological Strength with Technical Analysis: Understand that not all trades based on technical analysis will be winners. Learning from losses and fine-tuning your technical strategy is valuable.
Real Technical Trades vs. Paper Trades:
Emotional Training through Technical Analysis: Real technical trades involve real money, helping you to develop emotional control as you follow your technical analysis strategy. Paper trading lacks this emotional element.
Technical Analysis in Real Market Conditions: Actual technical trading exposes you to real market conditions and the impact of your chosen technical indicators. Factors like slippage, execution speeds, and liquidity challenges are more realistic in real technical trades.
Psychological Resilience with Technical Analysis: Real technical trades build psychological resilience. Dealing with the emotional aspects of gains and losses based on your technical analysis strategy is vital and challenging to replicate in paper trading.
Facing Psychological Barriers in Technical Trading: In real technical trades, you encounter emotions such as fear and greed, which play a significant role in technical analysis-based trading.
Risk Management Learning with Technical Analysis: Real technical trades force you to practice risk management. The emotional connection to real money is not present in paper trading, and traders often take unnecessary risks without real consequences.
Practical Experience with Technical Analysis: Actual technical trades provide practical experience in handling profits and losses based on your technical analysis. This helps you refine your strategy and emotional control.
In conclusion, while paper trading is beneficial for learning technical analysis strategies, real technical trades are essential for mastering the emotional and psychological skills required for success. The control of emotions and risk management in technical analysis-based trading can only be fully understood and implemented through live trading experiences.
~MS
March 30, 2022
Founder & Mentor
www.marsequity.in