The Consequences Of Emotional Trading: Why You Should Discipline Your Emotions As A Trader.

The world of trading can really be so tricky and quite unpredictable in some instances whereby what you are actually expecting is not what you will actually later have access to at the end of the day. It can really be tricky. Most of the time as a trader when you have made your perfect trading analysis and actually thinking you will end up at the other winning rate only to see yourself been so much disappointed by the way the trading actually goes. That feeling that comes after can really be quite difficult for you to get it sustained or managed.

In my last post, I actually talked about Emotional Trading where I made the introduction about emotional trading and the fact that it has really damaged a whole lot of traders in their trading journey. Come to actually think of it, it has really been a strong force that every trader needs to contend with every blessed day because at the end of the day, we are all humans and we hage emotions.

But at the same time, even when we have emotions, one of the least thing you must not allow it to affect your trading journey is for you to actually be affected by it. Today we will be looking extensively in another interesting topic for today and which I strongly believe we will enjoy it. In my last post, I talked about extensively understanding the world of Emotional Trading and today we will be looking in details of the consequences of Emotional Trading.

Image Source

Like they always say, when there is no law, there is actually no sin. One of the greatest setback for every human being out there is what I will actually called the Ignorance factor. This is what you should know, you did not know it and the fact that you did not know it is actually working against you. Come to think of it actually, when you don't know the side effect of emotional trading, it will really be difficult for you to even see the need for you to avoid it. I will be talking about some consequences of Emotional Trading together and hoping at the end of this post, it will help you to avoid it.

• Poor Decision-Making.

I will really like this start from this very basic point because it leads to many and controls many things in your trading journey. Like they actually always say that every human being is a product of their decisions making. Positive decision helps your life to end up in a positive way and negative decisions making makes your life to end up negatively. The same thing applies to the trading world.

Emotional trading leads you to poor decision making in your trading journey. It works in a way whereby you are pushed or led to make some decisions due to emotional factors like fear, greed, fustration and many more. So instead of you actually following the strategic market analysis, you tend to gamble on your decision making. You are tempted to react to market manipulation and fluctuations emotionally making you run to a loss much more than profit.

• Negative Impact on Performance.

Image Source

There is actually something about human beings that most of the time that we are motivated by our performance. As a trader, you need your morale to always be high all the time but that might not be able to happen when emotional trading is actually involved. When you trade Emotionally, you have high tendency to actually deviates from their trading plan and strategy which leads to inconsistent result at the end of the day. When all these are actually summed up, it can lead you to actually have a low performance and thereby influence your morale. In fact I have witnessed that in most cases have led a lot of traders to give up on their trading journey due to their performance.

• Psychological Effects.

This particular article will not be complete without actually mentioning about the psychological effect that emotional trading have on all trading. You will actually agree with me that trading is not an easy job as it is emotional demanding. As a trader, when you actually engage in so much emotional trading, it will really have a significant effect on your mental health and also psychologically.

How will it happened? When you constantly react to market market manipulation, movement and fluctuations with emotions like fear, worry, doubt, greed, this can lead to mental health and might even lead you to break down mentally. Not only that but due to the fact that when you engage in emotional trading, you are bound to witness more repeated losses and at the end of the day leads you to have low self esteem and this can lead to depression.

• Loss of Capital.

Of course this will certainly happen in every trader trading journey when you engage in emotional trading. It might not happen immediately but actually at the end of the day, it will certainly leads to that at the end of the day. I can confidently tell you because I have been in that shoe that Emotional trading always leads you to significant losses at the end of the day.

The more you actually engage more in letting emotions dictate your wrong decision making, it will lead you to make wrong trading entry which will run at loss instead of profit. When you actually combine all these together at the end of the day, you will actually see that it makes you to run at loss of capital eventually making you to quite on your trading journey at the end of the day. That's something you should actually avoid. This will in turn affect your financial goals whether short-term or long-term.

• Affected Relationships:

Image Source

Many of us might not see this as a consequence, but I will add it to it and use it to round up. At the end of the day, most of the time, emotional trading actually affects relationships with families, friends and even trading partnwrs. Most of the time the stress and mental effects that it cause to the traders can lead to behaviours which can affect the family and affect personal interactions with people most of the time causing conflicts even in the family or among friends.

I will like to actually stop here. So much to still talked about but I will keep it for my next post. I actually believe that you have actually been able to learn a lot from this post and will apply it to avoid emotional trading. In my next post, we will be considering another aspect of emotional trading which you will love also.