Make Better Decisions by Practicing Emotionless Trading

Make Better Decisions by Practicing Emotionless Trading

Trading with too many emotions can be tiring, mentally damaging, cause burnout, and affect decision-making. I'd like you to please read about the many ways to create a trading style that supports excellent mental health.

What separates the day traders from swing traders and swing traders from investors? Of course, many things can be listed, but the most applicable are time and position size. Below are concepts I implemented during my stock market career, which helped me deal with the anxiety of losing money and create a healthy work-life balance. Many people find A healthy work-life balance challenging, but you should never stop working towards a peaceful lifestyle.

Pre-market Studies

It needs to be more widely understood that taking a day or weeks to watch price action could be to your advantage. Some of my best plays have come from watching the market for a few days before opening a new trade. Believe it or not, many traders need help to go a single day of not trading. Some market participants may have great reasoning, but most retail participants struggle to fight the urge as they proclaim they’re “missing out on opportunities to make money.”

I firmly believe that you must watch other people make money while you sit on your hands to become a profitable trader. There are a couple of psychological reasons for my stance.

1. You have not mastered an essential trading rule: understanding that not every trade is your trade. Others around you will sometimes make money when the stock goes up, but your play is to profit when it comes back down.

2. This means you are trading emotionally. Even if you profit on a few correct trades, your strategy based on irrational emotions will eventually fall under pressure. Some traders do all the research, find great levels, write out a plan, and while sitting on their hands looking at others' cheer, they get anxious. This anxious feeling unconsciously motivates you to go against your plan, costing you money. As a market participant, you must be able to take in the outside noise, organize the noise, and only keep what fits in your plan as an independent thinker.

From experience, you can live with yourself when you make mistakes that were your decision. However, it can be mentally sickening when a trade or investment results in a loss after adjusting your plan at the last second because of something trending on Twitter.

Now, are there times to abort the mission? Of course, knowing when you are sticking with your conviction is key. The plan is to have an in and out target before opening a position. This is why having time to reflect on the market is essential—having a clear view before the market opens or a roadmap to follow will increase your ability to focus on yourself and your account.

If you are new to options trading, please check out our beginner’s Options Trading Mini-Ebook.

What should I look for when studying?

Studies can be considered a multitude of concepts. Sorting through thoughts before the market opens, paper trading to test strategies, journalling nightly recaps, charting out analysis, dissecting economic data, or even creating a watchlist of companies with potential buying and selling targets.

More on this subject can be discussed daily for premium members.

Order flow techniques are reliable. For those who have never heard of this term, Order flow is the rawest form of data a trader can get their hands on. Markets are driven by supply and demand, a.k.a. buyers and sellers. If one side outweighs the other, that side holds the market edge. Simplify Wall Street will follow the S&P500 index (or $NASDAQ) and find what companies show convergence or divergence as a leader or a lagger within the ETF/Index.

Gene (Founder of SWS) Always says:

"Take 10 in the direction of 40".

All this means is if I buy a stock at support when it costs $200, and my target is $240, I can sell some at 210-215. This ensures a higher probability of profit as most traders don't buy at support; they only buy when the stock is already mid-cycle. In other words, my target is $240, but a handful of traders will start buying at $235. Who is at more risk of losing money? The guy who bought near 240 or the guy who bought at 200.

If you are new to trading futures, you can read below to understand what E-mini futures, $SPX, and $SPY are and why I blend the three in my trading!

The Power of $SPX $SPY and E-mini Futures!

Stress-Free?:

Now, no job will be stress-free, especially on Wall Street. The key is limiting stress and its weight in your everyday life. When you are an investor, the goal is to find a company with a high growth probability over 10-plus years. A swing trader, an excellent strategy for business professionals working full-time in a corporate office, will purchase a stock or option to hold it for weeks to months. These two market participants can succeed significantly if their options contracts have longer expiration dates or if they decide to trade equity. Having time before a trade expires, working with the correct position size, and doing research gives you an edge that allows you to build conviction. Conviction is similar to the amount of confidence you have in a trade. Could you set a few scenarios to void your plan and let the trade take its course?

Moving Forward

Trading is not easy and never will be. I encourage all traders to walk away when anxious, ask questions when confused, be patient with themselves, and understand you only get one life.

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