How to Control Fear and Greed in Trading?

Do you close your 4% profitable trade at 1% profit?

Do you hold losers’ stock too long and sell winner stocks too soon?

Do you sell your winner because of fear and doubt?

95% traders lose money because of the trading strategy, limiting belief, fear and greed in trading. 

5% of Skilled traders don’t face such problems. They use stops, control their emotions, and earn money.

Limiting Belief

The voice in your head judges you, doubts you, lowers you, and tells you are not good enough.

Limiting beliefs stop you when you’re doing something which you do every day.

You often hold yourself from trading after the great study because your inner voice turns your mind that trade will not go in your favor. 

You see a later stock move as per your research. It happens; the reason is your limiting belief.

Negative emotions kick in mind when one uses words like "I don't trade well" or 'I'm angry" or doubts our study. 

To build positive emotions, you should use words. 

"I'll follow my trading plan, "I'll believe in my set-up," I want to be a successful trader."

Your trading plan is a blueprint of what, why, how, and when you'll do.

The trading plan consists of your Entry, Exit, and Stop loss in trading rules. But there is more which you need to learn and practice.

First, Don't jump into the trade without proper confirmation. The mistake most traders make. 

Assumptions or guess-work never helps. So watch Price action or wait for breakouts to time your entries.

Second, Fix your winning and losing limit.

We all want to earn more and more money. But you should know where to stop. So you don't become the victim of over-trading.

Fix how much you can afford to lose in a single week. And then divide the amount by 5 (no. trading days in a week) to know your per day loss limit.

Let's say your per week loss limit is 10,000 INR. So, 10,000/5 Trading days = 2000 Rs is your per day loss limit.

Now in the week, on any day, as your per week loss limit gets over, you will stop trading. The same rule applies to the per day limit.

In the same way, you have to decide the profit limit per week & day. And as you earn such a profit, you will stop trading for the rest of the day or week.

Last, Fix Your Position-Sizing. 

Most traders treat their accounts like loading trucks. 

Stop this now. If you want to become a profitable trader. Don't put the burden on your mind and account.

Use fix percentage-based stop loss method to manage your position size. It's the best technique.

About the author

Divesh Jotwani is a Full-time trader in the Indian stock market. He has spent over 20+ years researching and discovering WD Gann's methods and applying them day in and out markets.