Emotion & Trading

Can I control my emotion?

It's kind of tiring to flying back from the US to Singapore - an aggregate 24 hours and 10,000 miles away from Los Angeles to Singapore. I am still trying to catch up with lots of stuff I learnt in the US but must admit that it may take a few more days to do so. Never mind. There is no need to rush.

This brings me to another point which I want to share today. It's emotion....

Human beings are human beings. We are not robots and hence, we have EMOTIONS. Sometimes we are happy. Sometimes we are sad. Sometimes we aren't feeling good. Sometimes we need support and enouragement from family and friends.

As a professional trader, I fully understand that I will never remove emotion when I am in a trade. My trading account was up 10% just over last week and how can I say I am not happy? It's emotion, isn't it?

Emotion is a culprit in our trade. When we have no trade on hand, our emotion may tell us to look for trades so that we have enough trades to keep us busy. Sometimes when we are in the trade, emotion may tell us to deviate from our trading plan When we have losing trades, emotions may transform into hope which in turn tells us to stay on because there is a chance of recovery.

I tend to admit that emotion cannot be completely removed but we can control it to certain extent. Here are some thoughts:

1. Practise quality assurance - make sure all potential opportunities we identify are good ones. It is good to have 10 trades at one time with good quality rather than 30 trades at one goal where some are good, some are moderately good. This will definitely help to increase the win/loss ratio.

2. Practise internal control - when I am not in the mood to trade, don't trade. When I am busy with some other thing and cannot focus on my trades, don't trade. Spend whatever time available to manage the existing trades will be a good idea. Actually I used to enjoy Thinkorswim US$40 rebate because I opened lots of trade in the past. However, I haven't been able to enjoy such rebate last two months but my trading result is a pleasant one. So, this may suggest that fewer trades may be better for me, even though I am a person who can easily remember as many as 60 trades at one time and can still remmeber all the details.

3. Practise management questionnaire - i.e. being the boss of the business, and the central management and control, I got to ask myself in what way I can improve my trading results. Is there anything I should be aware such as whether my trading plan is yet to be completely thorough or the timing of the entry of a trade.

4. Proper documentation - that's the reason why I started this trading blog. So, whatever discovery I have, I can document it and review constantly.

5. CPD - Continous Professional Development is essential, either in the form of continuous education/ seminars or self-study.

Have a good weekend.

Good trading!