Frustrated, Angry, and Irrational
If you are like most traders, you have an unbridled need to win, and win big. With the interest in the markets in the past few weeks, you may have high expectations for your trading. You may believe that with all the interest in the markets these days, taking profits out of the markets should be easy. But even during times of optimal market conditions, obstacles get in your way: Current events impact prices, or reports of interest rates hikes or consumer confidence may temporarily make the markets go against you. Unless you are ready to tackle these setbacks, they can throw you off balance, and produce feelings of
frustration and anger. And when you are angry, you can make impulsive mistakes or even act irrationally.
People experience anger when they feel that they have been unfairly wronged. Traders become angry at the markets because they believe that the markets and the people involved in the markets should act in ways consistent with their trading plan. It's emotional and illogical but true. When the profits don't materialize, they implicitly or explicitly believe that the markets have wronged them, and they naturally seek revenge.
Anger can be a dangerous emotion. When people are angry, they are ready to put up a fight. They focus all of their energies on fighting and seeking revenge. It's hard to think clearly when you are angry. Sound decision-making requires the avoidance of such emotions.
There's no reason to be angry at the markets. It's important to recognize the reasons for our anger. By doing so, we will feel less anger in the long run. How can you stay calm? First, don't take setbacks personally. Setbacks happen. Taking them personally only makes you feel bad. Anger is an interpersonal emotion. We are usually angry with someone because we believe that he or she has purposely tried to harm us. The markets may consist of people making trades, but it doesn't make sense to treat the markets as an interpersonal setting. The people participating in the markets may engage in actions that thwart your goals, but their actions are not directed toward you personally. It is best to look at the markets as an abstract impersonal entity, rather than a collection of people. The more abstract and impersonal you look at things, the easier it will be to look at matters coolly and objectively.
Second, expect setbacks. Setbacks are commonplace when trading the markets. We tend to feel angry when our expectations are not met. When you are expecting to win, and profits are not realized, you have a natural tendency to feel upset, frustrated and angry. However, it isn't useful to have high expectations in the markets. Don't depend on the markets to fulfill your goals or meet your expectations. Assume that anything can happen. Indeed, in dealing with the markets, it's almost a given that you will lose money, so it is not useful to expect to make money on every trade. Just accept what you can get. You will feel better if you do. Eliminate any preconceptions you have regarding the outcome of a trade. For example, it is essential that you learn to anticipate and accept losses. If you cannot accept a loss, you will feel anger and want to get even. But if you expect to lose and accept as a natural consequence of doing business, you will tend to stay calm. Don't let anger imp act your ability to trade the markets in a cool, rational and objective state of mind. If you can anticipate setbacks and accept that nothing is completely certain when trading the markets, you will be able to cultivate the mental edge of a winning trader.
