It is oftentimes difficult to become rational when your emotions are on the line. If you are the type of day trader who shouts at your screen urging the market to move for you or shout out with joy when you begin to see your earnings, then it is time to asses yourself.
Emotions are out of the game when talking about this trade. You cannot be emotional when you are trading. Emotions are the downfall of most novice day traders. Why? Because it makes trading a lot more difficult to profit, to take risks and a lot more difficult to assess. Emotions would naturally cloud your judgment. It could push you to make decisions that you would otherwise not make if you are calm and rational. It will make you panic.
But there is more to trading than yelling at computer screens and irrational behaviors. Here are some of the main emotions that you should be on guard when you're in the business:
Fear
Fear is said to be an effective survival mechanism but only in its right quantity. Everything that goes beyond what is helpful will alter your behavior. It will put a stop to your decisions. It could paralyze you. As a trader, you should learn to asses your fears - do they help you or do they cripple your decisions?
The main fear that all traders have is that they will lose their accounts due to losing trades. This is rational fear and is highly possible. But one has to understand that he must sometimes make fearless decisions. To be able to minimize fear in the trade, you have to acknowledge that no one in the trade came in and went out without losing, and sometimes depleting, their accounts.
Greed
Most people, when they enter the trade, only have one thing in mind- walking out with some great amount in their hands. That's ok but when it starts to give you unrealistic expectations then it is time to stop for awhile and think- what is your idea of "earning"?
Greed is the direct opposite of fear. It makes someone take the decisions that he would not normally take or do the things that he would naturally be reluctant to do. Greed could make someone stick to a single position far longer than necessary or to randomly select trades which appear to be lucrative. But again, when used in the right quantities, greed could be a motivational factor.
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