It’s difficult not to do isn’t it? You take a trade that from the moment you take it, it goes straight to your target. It feels great. You see that profit in your account and want to tell the world just how wonderful trading is! Maybe you start projecting forwards into the future about how your account will look if you keep trading like this.
We’ve all been there at some point in our trading. Extrapolating the past to create a future that looks as bright as an Elon Musk rocket heading for the stratosphere.
I’ve seen many a new trader get excited about their winning trades and even some more experienced traders who should have learned by now that getting excited about the winners is a recipe for disaster.
But why is it?
The problem is down to psychology of course! If we allow ourselves to be elated at our winning trades, how are we going to feel about our losers?
When those inevitable losers come, we are much more likely to feel depression or at the very least despondency and that’s not healthy for us as traders.
A trader on an emotional roller coaster like that is then much more likely to react to those emotions by doing such things as hesitating on future trades; over-trade; revenge trade or even take big risks in order to recover any losses as quickly as they can.
Oh and let’s not forget the health issues associated with elevated stress levels that come from high cortisol running through your system!
If you can train yourself to not be excited about the winners, you’re much less likely to be depressed at the losers. As a result, you are much better placed to not suffer from irrational trading behaviours as mentioned above.
I remember Jonny Wilkinson, the England Rugby World Cup winner recalling that kicking the drop goal that won the tournament back into 2003 should have held no more emotion for him than completing the washing up. Now that’s a challenge….