How To Trade Blog: Emotions During Trading In Olymp Trade: Throw It In The Trash (Part 12/20)

Trading is a game of emotions. Do you understand what I mean by looking at the profile picture of this post? Either throw away your feelings or kill yourself. This article will explain why I say that.

The story of emotions in trading

The last days of July 2020 are probably one of the nightmares of gold traders. Gold hit the top, reached an all-time high, and kept going up without a stop. But few people made any money. Those who claim to be traders have buried themselves in the sanctuary of Gold.

I, you, or anyone who knows about technical analysis knows that: Gold is in an uptrend. Who doesn’t know that the world is in crisis because of epidemic diseases? FED has pumped trillions of USD to save the US economy. This devalued the USD… and? Gold would definitely INCREASE in price.

But what did the majority do? They did the opposite. They went against the trend and predicted the price of gold would fall. The reason is simple: Because it had risen so long; because it had peaked for 8 years; because it felt like it was about to decrease, etc.

The peak gold price opened up an opportunity. It’s like giving you a bullet with a gun. Your job should have been aiming directly at the profit. But no, most of us would point our head with that gun and pull the trigger. Pow!

You understand what I mean. There are traders like me, and you too. We do not trade on the knowledge that we have learned earlier. We trade based on emotions. And we lose everything because of decisions that come from emotions.

Emotion in trading is what makes everything different. Let’s read!

Principles and feelings

There’s a classic piece of advice like this: Trade with what you see, not what you think. This means: Use reason to analyze the market and see its true nature. An uptrend is an uptrend and a downtrend is a downtrend. And trade based on what you see. Never go beyond these principles.

In fact, the majority of mistakes in trading come from “feelings”. It feels like the price has risen too high and it will not continue to increase in the near future. The price makes you feel it’s about to reverse. You feel like the opportunity has come and that opening an order now would surely win, etc. There are a lot of feelings when you look at the Japanese candlestick chart. The result of these types of feelings is only one: A dead loss.

That’s it! We always say to each other that we will analyze and trade based on a rational head. But when it comes to closing, we make sensory decisions. Our inner self arises which makes emotions control reason. And after that… there is no after that. By the time you wake up, you have run out of money.

You believe in your feelings, don’t you? You have a 6th sense, don’t you? Oh well, become a prophet and never be a trader.

Losses and burned accounts

It sounds the same, but the nature of losses and burned accounts is different. Loss is losing money but a dead account is running out of money. In trading, a loss is normal but a dead account is abnormal.

So why?

Answers: Making money in trading means predicting the future market based on data from the past to make the right decision. Who knows what the future will be like? Therefore, any trading strategy of Fixed Time Trade or Forex only carries a relative probability of winning. Therefore, you may lose money on some trading orders that you predict incorrectly.

But, a burned account is different. A dead account means you run out of money. And the only reason to explain for a dead account is: You can’t control your emotions. Consider again if this is true.

Losing is temporary. It’s the rule of the game. But what’s important is that you have the money to start over. Therefore, if you do not learn how to master emotions in trading, you will burn out your own money sooner or later.

Traders and addicts

Gambling addiction is the urge to lose control of one’s gambling behavior. This is the feeling of happiness when gambling. The more they gamble, the more they bet, and the more obsessed with gambling they are. And the consequences, we all know: Losing everything.

Drug addiction is a dependence on drug substances. When stopping using, the body will suffer from discomfort, goosebumps, irritability, restlessness, insomnia, etc. And the consequences are also: Losing everything.

Trading addiction is the feeling of wanting to trade to satisfy one’s own feelings. These are regularly opening candlestick charts, itchy feelings, irritability, uncontrolled trading, etc. If you are having these symptoms, you are definitely a trading addict. And of course, the eventual result for all addicts is the same: Losing everything.

The distance from a trader to a trading addict is extremely fragile. Traders are emotional masters. And trading addicts are the ones who let the emotions take over. So, either you throw your emotions in the trash, or sooner or later you will lose everything.

The last line

95% of traders are always the losers in the market. The market is still the same. Knowledge is also the same. But why do 95% of participants lose money? Simply because: Human nature never changes. All of our decisions are dominated by emotions. And the truth is our feelings are always wrong.

I make a lot of different comparisons just to want to close one problem: Emotions are something that needs to be thrown away in trading. That’s right! Round it up and throw it in the trash.

One week without trading in Olymp Trade

After the 11th article in this series, I have not opened any Olymp Trade orders. Wow! I want to spend a long week to stop and not to open any order in Olymp Trade. There is no need to observe the market, no need to make money by all means, etc.

If you are reading this article, please try to stop once.

And today, I will withdraw $50 from Olymp Trade to ACB Bank. This will be the 12th time in this series I withdraw money. Hopefully, I will complete this challenge.