Day Trading: Why an Emotional Rollercoaster is Addicting

The speed at which money can be made or lost in the currency market is second to none, and the excitement of potential profit is another reason trading is addicting. Trading is an emotional rollercoaster and anyone who wants to pursue trading as a career will learn, often the hard way, that emotions must be carefully managed to achieve success.  It is crucial to have a finely-tuned system so emotional responses can be minimized.  Technical analysis and consistently-accurate trend forecasting can deliver the level of confidence needed to eliminate emotion-based trades.  A system which combines electronic trading and human discretion is what we would recommend for anyone interested in trading profitably.  A lot of time needs to be devoted to exploring existing trading systems, and possibly creating an original system.  We have found that it is a time commitment worth making.

Unless we are able to recognize our own emotional responses, we will have trouble controlling them and finding ways to deal with both positive and negative emotional situations. One of the toughest lessons a trader needs to learn is that it is OK to lose, it is OK to be in a draw-down, and until a trader can live with his or her losses, trading is not going to get any easier.  Trading day-in and day-out is a stressful career, but that stress can be effectively managed, and days of losing trades – or just the periods of draw-down – need not be the cause of poor trading decisions.

We have learned to joke around often in the office, and work hard to help each other keep a positive attitude.  Some key components- not just in day-trading, but any profession are to:

1. Stay positive and know that there are always going to be challenges.  Simply keeping a positive attitude can do amazing things. A conscious decision to remain positive must consistently be made.  As a trader you will experience times of disappointment, and you will likely make some poor trading choices, but you need to overcome those experiences quickly and get back on track rather than straying further from your system’s rules.
2. You must remember why you do what you do, and know that those who support you in your career do so for a reason.  My father always told me, “Just find something you enjoy, and get really good at it – success and money will follow.” If trading is the career you have chosen, it is a career you can stick with long-term because it is a skill which nobody can take away once learned.  So stay positive, put in the time, and stick with the rules of your trading system, and you’ll find that emotions don’t have to be an obstacle to profitable trading.
3. Stay educated on your profession. For many it is a requirement. Read trade journals, news that impacts your profession, and books that may help you improve your craft. For traders we recommend books such as Way of the Turtle, Trading from your Gut, and The Stock Trader.