Emotions are the enemy of stock trading. The best way to avoid problems is to use trading robots. In order to confirm this with facts, in today’s article, for a start, we will figure out what emotions can negatively affect a trader’s trading. By the end of the reading, there will be no doubt that robots are one of the best ways to deal with emotional decisions.
Alas, there is no insurance against emotions. And it does not matter at all how many years a trader has spent in trading and on the stock exchanges – there is always a risk that he will not be able to control his emotions. This is a simple human factor, which can only be eliminated with the help of automated systems. Yes, robots also have their drawbacks – they need constant updates and support. But the robot will never give in to the market because he is scared.
Emotions are the enemy of a trader
Here, it would seem, a trader knows almost perfectly the purpose and methods of using all economic indicators, studies and constantly expands his tactics and trading strategies. But as soon as you enter the market, all knowledge seems to become unimportant, and the slightest unplanned movement of the markets, for example, at the release of strong news, can break the whole fighting spirit. And that’s all – the trader is given to emotions. This is especially true for novice traders who are just taking their first steps in the markets. But even professionals can give up.
There is even an unspoken law in trading on the stock exchange: “The higher the emotionality, the lower the efficiency.” The trader is given to emotions and personal experiences. Emotions and the market cannot coexist with each other. In order to earn regularly, you need to forget about the existence of emotions. Do you know how specific feelings affect trading?
Tilt and rash decisions
To begin with, it is worth understanding what tilt is. This is a state of a person (it is worth noting that any person, regardless of his activity, in which he is easily exposed to emotions, as a result of which he takes completely thoughtless actions. This term is most often used in games – both in gambling and in computer games. In it is natural for a person to feel a whole “bouquet” of emotions on tilt:
- Dissatisfaction that develops into aggression. This is due to the banal unwillingness to accept the outcome of the transaction – i.e. her failure and loss of money – and a growing sense of injustice: “I did everything right!”.
- Anger and even rage. At the same time, they are often directed not at themselves, but at others – a person is inclined to look for the guilty from the outside.
- Vindictiveness. From anger, a desire is born to take revenge – to “recoup”, to prove to the market that you are capable of something.
Any of these conditions can lead to wrong, thoughtless and sometimes even fatal decisions. But it is worth remembering that the state of tilt can be divided into two more types – explicit and hidden. And if in the first case the tilt is formed instantly – for example, the order was closed with losses, the emotional reaction came right there, and the trader begins to “recoup”. Hidden tilt is even more dangerous – it destroys trading gradually, the performance drops every day, which leads to depression.
It takes time to overcome emotions. But in general, the ability to enter a state of “zen”, in which nothing can unsettle, depends on the temperament of a person. For some it is enough just to focus, for others it is a long process of working on oneself. But no matter what type of temperament, every trader should know about risk management and work on it and develop their own trading plan. This will help you avoid losses. You can learn about what trading psychology and risk management are from this video.
Joy and optimism are also a path to failure
Tilt on the stock exchange is an inevitable thing, but it is caused not only by negative emotions, as it may seem to many.
Surprisingly, even the joy of a successfully completed transaction can cause a loss. Greed or euphoria as a critical state of joy will be to blame for this. Experiencing excessive joy, a trader can experience a “clouding” of consciousness, due to which he will begin to make a mistake on a mistake, he loses his sense of risk, and therefore reduces control over transactions – simply because the trader begins to feel invincible, since he could “win the market”. It’s a lie. It is impossible to beat the market – you should always remember this.
How does euphoria feel? After several successful transactions, the trader feels a sense of pride in himself, optimism that now everything will work out and it will be like this all the time, it seems to him that he can move mountains. And each subsequent positive transaction is able to increase the “deity complex”. And if errors occur, little attention will be paid to them – this is an accident, a mystical accident, and the next transaction will certainly become profitable.
In order to combat this feeling, it is important to remember that profit is just a trader’s paycheck for a job well done and done right. If you treat it like that, then the joy of a successful deal will never grow into euphoria.
Most often, a trader realizes that he has fallen into the trap of tilt too late, because it is quite difficult to detect it. But if you notice these moments behind you, you may be on tilt:
- You increase the volume of transactions, although your risk management and deposit no longer allow this.
- In principle, you often violate the rules of the trading system and risk management.
- You abruptly decide to use the maximum leverage in order to disperse the deposit.
- Too eager to get back the lost money in the shortest possible time; sit out the moment and move the stops, refusing to admit losses.
- You change your trading tactics very abruptly and often.
- You suddenly decide not to take profits or limit losses.
- Look for someone to blame for your financial losses.
Sometimes all it takes to get out of tilt and back to your best self is to take a short break. But it is better to try to monitor your emotions and stop in time. Just remember: winning trades are the norm, losing trades are also the norm. This is the Forex market, and the holy grail with 100% efficiency has not yet been invented here …
Help of trading robots for a trader
..but they invented robots here! A good solution for traders who feel an excessive influence of emotions on their trading; for those who want to protect their trading decisions as much as possible from the human factor initially, as well as traders who want to maximize their trading through automation.
To begin with, let’s figure out what robots are in the Forex market. This is a special software used for trading on financial platforms. Complex algorithms for robots are developed by people – this is natural. But at the same time, ready-made programs do not adopt any “human factors” from their creators – fear, delight, and excessive greed. They continue to strictly follow the given pattern and nothing can unsettle them.
Automated trading has a number of advantages:
- Robots are ways to trade much more efficiently and show better results than a human. And the lack of emotions is one of the most important reasons.
- Robots are able to monitor a large number of orders at the same time – their attention does not need to be concentrated on just one thing, they are great at multitasking.
- Robots follow the laid down strategy and the established rules – they are not tempted to deviate from the chosen path with the thought “what if”.
- Robots are able to react with lightning speed even to the slightest market fluctuations – they are always on the alert.
- The robots don’t need a rest or a break – they can work 24/7 with the smooth operation of your computer and the Internet.
In addition, there are several types of robots – fully automated and semi-automatic. If a trader does not want to entrust full control over his account and funds on it to the program, he can use semi-automatic robots. In this case, the trader gets rid of the need to constantly analyze the markets and stress when looking for entry points – all this will be done by the program, which then simply sends the user signals with entry prices, certain stop losses, and targets, and the trader simply decides whether he wants to follow these signals.
Robots can make life and trading much easier for traders and investors. But for this, it is important to choose the right robot that perfectly suits your ideas about trading in everything – from the strategy it uses and its riskiness to the supported instruments. You can learn how and where to buy a robot from the video below.
But it is worth mentioning that robots do not guarantee 100% results to anyone – they have their drawbacks. For example, they are unable to think creatively or imagine what might happen in the near future. This is still a program in which a certain algorithm is embedded – therefore, if non-standard conditions for its algorithms occur, it is likely that the robot will not bring the results that the trader hopes for.
In order to avoid this, it is best to use an integrated approach to trading. Even if a trader uses a fully automated adviser, you need to check from time to time how the trade is going, if the settings have gone wrong. And it is important to always keep your robot up to date – robot developers can post updates to make it work correctly.
After all, successful Forex trading is not possible only at the expense of someone or something. This is a competent combination of constant development, learning and pumping my skills – not only trading, but I also have to control myself and not give in to emotions. And the use of advisors and robots will help make trading the most efficient and profitable – the main thing is not to lose your head.