Buying and Selling Stocks – Controlling Your Emotions
When a trader loses money, it is usually because they can not control their emotions. Those who act on their emotions often make irrational decisions. So, learn how to control emotions when the transaction will be one of the most important aspects of success. Successful traders can view the market objectively and are emotionally disconnected from market events.
Fear and greed are two main emotions that traders need to overcome. They are all very powerful emotions. When humans anticipate injury, they are instantly shocked and quick to respond. In the market, the response to fear usually leads traders to make an impulse decision that leads to a transaction error. Fear of losing money may cause someone to sell the stock before the target price.
The victorious merchant is free from fear and greed. When stocks fall, they will not be overcome by fear. They expect the market will be down. When an inexperienced trader sees a stock reaching its goal, they are often driven by greed, and remain traded in the stock, hoping to gain greater profits. So, set your target price, accept your profits and sell. You do not actually make a profit before you sell the stock.
Fear and greed are the main reasons why inexperienced traders trade at the wrong time. This is why skilled traders can take advantage of the volatility of the market to make a huge profit, while the inexperienced trader loses, loses, loses. No matter what the market does, a successful trader has a plan and sticks to it.
While it may seem difficult to make an objective sale at first, the more experience you gain in trading, the easier it will be. You can take steps to learn how to remain reluctant and objective:
o By trading you can afford to lose money and limit your risk. If a loss does not really hurt you, it's easier to convince yourself that the result is trivial. Once you are confident that your results are not important, it will be easier to maintain emotional separation.
o Know your risk tolerance. If the big risk makes you uncomfortable, do not do dice trading. First of all, security investment. As you become more knowledgeable and less emotional, begin to increase your risk.
o Do your homework. Build a trading strategy and make sure to stick with it. Stay away from the stock message board until you have confidence in yourself. They may have the ability to swing your emotions, thus swinging your trade. Successful traders can think for themselves. They do not let the stock tell them what to do.
o If you find yourself obsessed with your stock, you start trading emotionally. Prevent yourself from becoming affiliated and confidently remind yourself of your trading strategy.
o Do not trade only for trade. Even if the stock market can be an exciting place, you might think you missed something and do not buy it for stocks. Instead, learn how to predict the market. More deals do not generate more profit. In fact, more and more costs associated with the transaction, in fact, may make you become more emotional participation. Wait for the ideal entrance and exit.
o Losses are part of the transaction. Instead of letting your emotions control you, after losing, put forward a plan to manage them. Some people say your first loss is your best loss. This is because you want to look back at what you did wrong and learn from it.
If you can learn how to trade without emotional involvement, you will always be more successful. The best way to learn how to trade mercilessly is not to think of the stock as a company, but rather as a stock. As you have more knowledge of the market, you will become a more confident trader. Start taking small steps to overcome your emotions. Study the market and do your homework. Once you can think objectively, you are becoming a consistent and profitable trader.