How to keep emotions under control while trading

So, for the past month, the market’s been treading water. There were a few highs, but mostly stocks have been range-bound. Then, all of sudden, the market takes off in an unexpected rally.

Some traders get caught up in the euphoria, and start taking positions too fast. You know that you want to get a piece of the action, but you’re afraid to act too fast.

Now is the time to control your emotions, and work out a strategy. But controlling emotions is one of the greatest challenges in trading stocks, because more people trade on their gut than on anything else.

You don’t want to be this kind of trader. Emotions are the reason why the majority of retail investors in stocks never make much money. The professionals, the serious and determined full-timers, think of trading as a business, just like selling bicycles or providing software and services.

Professionals doesn’t go with their gut, because they have a longstanding business plan that allows them to look past the single trade and see the big picture. Just like a bicycle manufacturer or computer services provider, each of whom has an overarching program which they stick to in order to improve market share, the professional trader sees each trade as part of a greater whole, a big project of which a single trade is only a single step.

This is why professional traders depend on their trading journals. They count on their high-quality trade journaling software to provide the history of what they’ve accomplished so far, so that they can see where they have to go next. When traders begin to think about going with the gut, the trading journal pulls them out of the emotional trap, and sets them back on the progressive track determined by their strategy.

The trading journal isn’t just a record of trades, it’s a key component in the professional trader’s box of tools. No trader should be without it, and no trader can afford to neglect it. It will help you to control your emotions while trading.