As
is known the emotion was instrumental in determining our trading results.
Inability to control and regulate emotions can be fatal. Because a person's
emotions is likely to change, we need a system to manage and control it.
Emotion management system (SME) or emotion management system is one of three
main pillars in the trading plan, in addition to trading systems and money
management system.
Regulation
and control of emotion is a sub-system that must be planned. Planning the main
thing is to be able to drown out the strongest possible destructive emotions
(destructive emotions) can make you deviate from the system, and strengthen the
emotions favorable (beneficial emotions) can make you stick to the system.
So
the emotions that are probably going to get you out of trading systems and
money management system you should mute, although can not be eliminated altogether,
and emotions that make you always tend to adhere to the two systems should you
be strengthened. You should always practice to highlight the favorable emotions
when trading.
The
basis of the SME is any kind of emotions that arise using mental energy
reserves are limited and that should not be squandered on things that are
detrimental. Emotion is a mental transformation from idea to action, therefore
it is necessary mental energy. Your actual trading results are not directly
related to the mental, emotional only due to trading can hurt you mentally.
Mental
energy is needed to realize the trading systems and money management systems,
and should not be squandered to respond to destructive emotions that are not
useful for trading. If we already know the fact that the market price movement
randomly distributed, then we do not need to worry on the trading results as
long as we stick to the trading systems and money management systems that have
been tested.
Destructive emotions
The
destructive emotions of the most powerful and dangerous is the fear of losing
money. This fear stems from the realization that has been programmed that money
for us is limited and is a commodity that is very meaningful. It is undeniable
that almost everyone thinks of money as a symbol of life and independence. This
association is mentally very strong so we tend to have an automatic mechanism
to defend tooth and nail to protect this valuable commodity. Fear is what
causes traders to close positions prematurely (premature exit), or reduce the
size of the position should be recommended by his money management system, for
fear of loss. Usually this happens after suffering consecutive losses.
Other
destructive emotions are greedy. It also comes from the awareness that has been
programmed on the importance of earning money. Many traders who profit target
level change in the middle of the road, or let the position being open profit
and does not abide by the rules of the trading system used. Rather extreme,
traders are afraid of losing the opportunity to enter the market without any
signal he opened trading positions, or to suddenly increase the position size
than they should because they expect a greater profit. Usually this happens
after a trader's profits respectively.
To overcome the two types of
destructive emotions that you should:
•
Recognize that to two types of emotion that exists on yourself so that you can
anticipate every time one of the 2 types of emotions come to the surface.
•
Knowing that the market price movements are distributed randomly so you'll
never be sure where the trade will profit and which ones will loss.
•
Believe that the trading systems and money management system you are using is
the best. If you do not comply with such a system means you do not trust
yourself. And when you lose confidence, you should stop trading until the trust
you recover.
Emotions favorable
Always
believe in trading systems and money management system that is used is very
favorable emotions. You will always follow the system so that execution is that
you do really accurate in accordance with the rules of the system that you have
created. Emotion is what you should practice before actually plunging into the
real market. Conversely lack confidence in the trading system will lead to the
execution of you do always deviate from the rules of the system that will
ultimately affect your emotional stability.
Factor
is very important discipline in trading, and this can be measured by the
quality of execution in accordance with the rules of the trading system. If the
formula is made, the discipline are: (belief in the method of trading) or
(execution corresponding trading signal does not do). The more you ignore
trading signals that it will be increasingly less your trust in the trading
system that you have created, which means you are getting no discipline. If
this continues then you will lose confidence in trading systems and money
management system that you have tested. Discipline for always adhering to the
trading system is needed, especially when you experience losses in a row
(losing streaks).
To
strengthen the profitable kind of emotion that you have to avoid emotional
involvement on every trade you make. Emotionally you should be able to be as
good at the time when the profit or loss. In the long term, trading systems and
money management system you use and have proven it will generate profit.
Emotion management methods
In
order to reinforce the emotions that are profitable, you have to reprogram your
subconscious mind to always hold on to the trading system that you have
created. One way is to embed the orientation of the trading system is not in a
position trading. No matter whether the movement of the prices now are going to
break the high or low break if your trading system does not show a signal to
buy or sell then you should not react. Besides always instilled that trading
systems and money management system you use you will get the results in the
long term.
A shift in thinking that you can do
with:
-
You will be satisfied if trade in accordance trading signals than satisfied
because the profit that you will gain from a position that you open.
-
You will always look at your account balance development in the long term than
to see the results of every trade you make.
-
You will be afraid of losing trade opportunities appropriate trading signals
than the fear of losing on every trade you make.
If
you always think negative, with any trading system you will be hard to generate
profits in the long run. Also required training and a long time to be able to
manage and control your emotions in trading.
Source:
www.forexhit.com - Emotion Management System