Trading Psychology: Taming the Emotions of Trading

One of the most valuable assets any commodity trader can have is proper trading psychology.

Futures traders often get caught up in their emotions. Not only do fear and greed take control, but also hope and panic. It is impossible to be a successful futures trader when these emotions take over. Traders with wild emotions change their tactics consistently. This is a good way to lose your money.

Successful traders think much differently about their commodity trading than unsuccessful traders. A successful trader believes in the long run that he will be a winner because he has an edge, controls his risk, and will execute his futures trading strategy accordingly. He thinks about his trading as a business.

A winning trader has an edge when he has tested his futures trading strategy over a long period of time and believes it to be a profitable one.

One reason for this is that he is able to control his risk. When something is not working, he simply gets out of his position and waits for another signal. By executing this strategy, he avoids large losses which are devastating both financially and mentally.

A successful trader learns to focus on the big picture and not individual trades. He believes that he will be successful over a series of trades. Which particular trades in the series will be successful, he does not know. He has instead, learned to think in probabilities, has realistic expectations and expects the unexpected.

Finally, when a trader is in a winning trade he will follow his trading strategy and exit when signaled. He believes in himself and in his plan and will not give in to the psychological pressure to exit the trade prematurely.

Many unsuccessful traders, even those that have good trading strategies, do not yet have the proper trading psychology to enable them to follow it.

So, what is the best way to develop proper trading psychology? Discipline through knowledge.

Commodity Trading Solutions offers futures trading strategies that take only low risk trades and trade infrequently. This requires a much less strenuous level of trading psychology to stick with the strategies.

CFTC REQUIRED RISK DISCLOSURE
Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. In no event should the content of this website be construed as an express or an implied promise, guarantee or implication by or from Commodity Trading Solutions, LLC that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.