Sentimental Trading Has No Place In Your Day Trading Strategy

There is a lot of psychology involved in spending your life is a day trader. Throughout the course of a day trader’s week, he or she can experience all the emotions of success and loss, and the heartache of making a bad decision. One of the psychological traits that many day traders work on is controlling their propensity to perform sentimental trading.

Why Do We Do Sentimental Trading?

There are numerous reasons why a day trader might become highly sentimental about one of their trades. For some day traders, it is just a natural reaction in their personality because they become sentimental over a variety of things in their lives. Other traders that are not sentimental about external things at all can be extremely sentimental when it comes to their egos. They simply do not have it in them to accept a losing trade. Even if they hold tight to their money and display frugality away from their day trading strategy, losing a trade might hold more value to them than simply accepting a loss.

Ways to Overcome Sentimental Trading

If you find you have become one that allows sentimental trades to sneak into your day trading strategy, it is best to get a handle on it before it creates a negative impact on your profits. Begin by learning to throw away things on a daily basis. Instead of holding on to things, including your ego, find freedom that comes from “letting go”.

You will need to get past the idea that miraculously somehow you will be able to reverse the trade to become more profitable. You will need to accept the fact that negative trades happen all the time. Losses should be built into your day trading strategy as a certain percentage of your overall results. If they are not, it is time to develop a more positive, realistic strategy.

Even building a strategy based on 55% wins and 45% losses will provide a generous amount of profit in the long run. You need to understand that trading in the markets, just like living life, is often very unpredictable. You can only work with what you know and realize letting go is part of your trading plan.

A Place for Sentimental Trading

If sentimental trading has become such an obstacle to your investment strategies, there is a place to express it. You can trade in simulation rather than by doing it live. This allows you to hold on to your investment dollars while you work to master the psychology of tearing down the barriers and learning to let go of your trades.

For more from Erich, visit the Indicator Warehouse for additional futures resources and NinjaTrader Indicators.