• NFLX
    332.06 USD 2.63%
  • NVDA
    269.87 USD 2.17%
  • TSLA
    193.9 USD 2.48%
  • SP500
    4028.21 USD 1.42%
  • META
    205.37 USD 2.33%
  • MSFT
    280.54 USD 1.92%
  • BRKA
    462146.21 USD 0.68%
  • T
    19 USD 1.5%
  • ADBE
    379.2 USD 1.54%
  • MMM
    103.2 USD 1.43%
  • AMZN
    100.26 USD 3.1%
  • AAPL
    160.79 USD 1.98%

How to control emotions in trading and protect your capital

Skilled and seasonal traders have learned one crucial thing - when trading, put your emotions aside. Here are a few tips on how to do it.

What not to do when trading

Emotions in trading (or investing) can harm traders in several ways. Here are a few reasons why emotions can be damaging to successful trading:

  1. Impulsive decisions: Emotions can lead to impulsive and hasty decisions, which can be harmful to a trader’s performance. For example, fear of losing money may lead a trader to sell a position too soon, while greed may cause a trader to hold onto a losing position for too long. Emotional decisions often go against a trader’s established plan, leading to inconsistent and suboptimal results.
  2. Loss of objectivity: Emotions can cloud judgment and cause traders to make decisions based on feelings rather than facts and data. This loss of objectivity can lead to mistakes and missed opportunities. Traders who allow emotions to drive their decisions are more likely to make suboptimal choices that are outside their goals and strategy.
  3. Increased stress and anxiety: Trading can be a stressful and emotionally challenging activity, and emotions can exacerbate these feelings. Negative emotions such as fear, anxiety, and frustration can cause traders to experience high stress levels, impacting their physical and mental well-being. Stress can also lead to decreased concentration, making it more difficult for traders to make informed decisions.
  4. Difficulty managing risk: Emotions can make it difficult for traders to manage risk effectively. For example, fear of losing money may lead a trader to take on too little risk, while greed may cause a trader to take on excessive risk. Emotions can also cause traders to ignore established risk management strategies, leading to increased exposure to market risk.
  5. Chasing losses: Negative emotions such as anger and frustration can cause traders to chase losses, making impulsive and ill-advised trades in an attempt to recover lost money. This behaviour is often based on emotions rather than a well-thought-out strategy and can result in significant losses.
  6. Overconfidence: Positive emotions such as excitement and confidence can also harm traders. Overconfidence can lead traders to ignore established strategies and take excessive risks, leading to losses. Overconfidence can also cause traders to ignore warning signs, increasing the likelihood of making poor decisions.

Containing emotions while trading is crucial to successful trading, as emotions can cloud judgment and lead to impulsive and unprofitable decisions.

How to contain emotions

  1. Develop a trading plan: A comprehensive and well-defined trading plan provides a roadmap for making decisions and reduces the impact of emotions. It includes the trader’s goals, risk management strategies, entry and exit rules, and position sizing. A trading plan helps traders stay focused and avoid impulsive decisions, especially during times of stress or uncertainty.
  2. Set realistic expectations: Unrealistic expectations can lead to disappointment and frustration, triggering negative emotions while trading. Therefore, it’s important to set achievable goals and manage expectations accordingly. This helps traders avoid the emotional turmoil that can arise from unmet expectations.
  3. Keep a trading journal: A trading journal records all trades, including the reasons for entering and exiting the trade, emotions during the trade, and overall performance. Reviewing the journal regularly can help traders identify patterns in their emotions and behaviour and make changes accordingly.
  4. Use stop-loss orders: Stop-loss orders are a vital component of risk management and help traders contain their emotions by limiting potential losses. By setting a stop-loss order, traders can take feelings out of the equation and ensure that losses are limited if the market moves against them.
  5. Take breaks: Regular breaks can help traders maintain emotional balance and avoid burnout. Traders should take breaks to rest, exercise, and engage in non-trading activities to reduce stress and improve overall well-being.
  6. Seek professional help: Trading can be stressful and emotionally challenging, and seeking professional help is a sign of strength, not weakness. Traders who struggle with emotional control should consider seeking the help of a therapist or counsellor to develop coping strategies and improve mental well-being.


In conclusion, emotions can be a significant hindrance to successful trading. However, by recognizing the impact of emotions and implementing strategies to manage them, traders can improve their performance and make better, more informed decisions. This includes developing a trading plan, practicing mindfulness, setting realistic expectations, keeping a trading journal, using stop-loss orders, taking breaks, and seeking professional help when necessary.


Post has no comment yet.

Want add your comment? Sign up or Sign in