Whether stock traders choose it or not, they are simply emotional. When they enter this king of business, they all have the best intentions of making tons of money with only little risks.

However, some of them fall to recognize there are predictable repetitive stages.  Today’s value of a company is easy to calculate. In stock trading though, you are trying to determine what the possible worth of the company is in the future and this is the very thing that drives the emotions of stock traders.

If you are planning to trade stocks, knowing the different stages of trading emotion will be a tremendous help to you. There are 14 stages in the trading emotion that seem to keep traders in an emotional roller coaster ride as they trade for stocks in the industry.

#1 Optimism – Everything starts with a positive outlook or a hunch that will lead traders into buying a stock.

 #2 Excitement – Things start to move the way we want them to you feel giddy because of it. This is where we start hoping and anticipating that we are possibly making a success story in the stock trading world.

#3 Thrill – The market is continually going in the direction favorable to you. At this point, you are starting to feel that you are too smart. This is the stage where we are fully confident with the trading system that we have.

#4 Euphoria – This is the point where both the maximum financial risk and maximum financial gain are marked. As the investments you made start to turn to easy and quick profits, we simply ignore the risk’s basic concept.  At this stage, we start trading at every opportunity we see with the aim of making bucks.

#5 Anxiety – The market starts to turn around. The market is starting to get back your hard-earned gains. However, this is new to us, we still believe with the trend we have seen before and still trade.

 #6 Denial – We still think that the market simply does not turn as quickly as we hoped. There must be something wrong is what we keep on believing.

#7 Fear – Reality finally sets in and you now realize that you are not that smart after all. From being confident, you are now confused. We know that we should start getting out with a small profit but we just cannot bring ourselves to move on.

#8 Desperation – At this point, all of your gains are lost. Without knowing what to do, we attempt to do things that will leverage our position again.

#9 Panic – This is the most emotional stage as this is where we are hopeless and clueless. We feel like we lost control and now are left at the mercy of the market.

#10 Capitulation – This is where we reach our braking point and start selling our position for whatever price so as we can get out and lose no more.

#11 Despondency – After our exit, we now view the market as something not for us and we develop a phobia of buying stocks.

#12 Depression – We drink, pray or cry. We think we are so dumb and we start to analyzing where we went wrong. This is where true traders are born.

#13 Hope – We realize that the market has a cycle, which then renews our hope and we believe that we can still do it.

#14 Relief – The market turns positive once again. We are seeing the coming back of our prior investment and we now have our faith in it back.

The cycle will then start all over again and it is up to you how to play it this time.

It’s all about memory. Janice Dorn, a psychiatrist, and expert on trading psychology writes that our memory of past trading colors our emotions and is, Dorn says, one of the most significant obstacles to trading success.

Why? “Because the brain remembers,” Dorn says. “The brain imprints loss or gain in a memory area called the temporal lobe, and generates fear or greed as a result of it. The larger the loss or the gain, the greater the neuronal imprint becomes. Losses are imprinted as fear and gains are imprinted as greed.”

Controlling these emotions is not easy, but a successful trader must transcend these feelings and concentrate on trading logic.
By reviewing entries in a comprehensive trading journal, one which includes all the aspects of importance regarding a trade, the trader can learn to distance emotions and trade rigorously.

It’s not just a matter of looking back on trades that were not successful to determine where the failure took place. It’s also a question of reviewing successful trades, to see where the emotional input came in.

Typically, a trader becomes overconfident with successful trading, and too fearful with failed trades, Dorn explains. Greed pushes the successful trader to do too much, and fear prevents the trader who has had a bad streak of getting back.

“With a couple of consecutive winning trades, the ego enlarges and invincible feelings overcome logic. This will ultimately lead you to trades that you normally would not have entered,” Dorn points out. Reviewing a trading journal enables the trader to remember poor judgment from the past, and to use it to correct the present, to prevent greed from overcoming logic.

On the other hand, the memory of bad trades that lost money can burn in a trader’s mind, and prevent pulling the trigger on new, potentially profitable trading. Again, the trading journal can play a useful role in recalling similar situations, and getting the trade back on track.

“Fear doesn’t form in a vacuum. It is a learned response to a particular event or probability. In the case of trading, when you have a trade that goes bad, the regret and frustration can carry over into the next trade. Often, the fear is so consuming, that you don’t enter your next trade.”

High-quality trading journal software can help the trader to escape from this cycle of fear and greed. With the input of all the relevant aspects of a trading decision, a trader provides the material to learn and change actions. With the record of many trades, patterns emerge that show, on the one hand, trading logic, and on the other hand, the fatal influence of emotion that interfered with a trading strategy.

“You are the problem and you are the solution. Living in the past or the future does nothing but stirs up emotions that impact adversely your trading and other aspects of your life,” Dorn writes.

A trading journal, powered by high-quality software, can change all that, and put you back on track to trade carefully.