If you are a trader, chances are you have experienced negative emotions such as fear and
anxiety when trading on the stock market. It can be extremely daunting and stressful, but it
doesn’t have to stay that way – with some guidance and effort, you can learn how to manage
those feelings to improve your trading performance.
In this article, we’ll share our top six methods for dealing with the negative emotions of
trading so that you can break free from any mental blocks holding you back from making the
best trades possible. Read on for our advice.
Take a break
Taking a break is one of the best methods to cope with negative emotions while trading. By
giving yourself some time and distance away from your trading activity, you’ll be able to
come back with refreshed energy and perspective. It can help you step back and assess
where necessary changes need to be made, enabling you to make more informed decisions
and reducing the risk of rash actions taken due to stress or fatigue.
Taking breaks can also give you perspective on how far you’ve come in your trading journey,
helping to keep your motivation high. Taking breaks most days becomes part of a productive
routine for the trader focused on long-term success.
Develop a strategy
Having a strategy in place is one of the most critical aspects of successful trading. It will help
keep you focused and give you a plan to follow, clarifying the steps needed to reach specific
goals. Developing a trading strategy should involve careful consideration and planning;
consider what kinds of trades you’re willing to take, how much risk you accept, and any other
factors that may affect your decision-making process.
A clear strategy can provide structure and reassurance when emotions start running high
due to market changes or losses, enabling traders to make decisions objectively rather than
Analyse your trades
Analysing your trades is a great way to identify potential areas of improvement and reflect on
what went right and wrong. Reviewing each trade can help you understand the market better
and highlight anything you may have overlooked or any mistakes made. It will also track your
performance over time, helping you determine which strategies work best.
Additionally, reviewing each trade can help prevent future losses by reflecting on why
specific trades didn’t work out and recognising patterns that could have been avoided. This
analysis can be especially beneficial when dealing with negative emotions such as fear and
anxiety. It helps put things into perspective rather than letting emotions take over decision-
Use CFDs for hedging
Contracts for Difference (CFDs) are an excellent option for traders in hedging their trades.
By using CFDs, you can reduce the overall risk of your portfolio and diversify your
investments. It is because a CFD allows you to use leverage to trade in a bigger market than
would be available with cash alone. So if the markets start heading south, you can protect
yourself from losses by offsetting them against gains made on other markets.
Using CFDs can also potentially help to increase your bottom line as they offer high liquidity
and low costs, meaning that traders can buy or sell quickly without paying too much
commission; this makes it easier to respond fast to sudden changes in market conditions
whilst keeping your position open.
Talk to other traders
Talking to other traders is a great way to get support and advice and share your
experiences. It can be comforting to know that you’re not alone in facing specific issues, and
talking through any worries or doubts with someone experienced in trading can also help
reduce anxiety or fear.
By engaging in conversations with other traders, you can learn from their mistakes and gain
more insight into the trading world; this can help you make more informed decisions about
investing. It’s also an excellent opportunity to ask questions and get clarification on anything
that you may be confused about or need further advice on.
Utilise risk management tools
Risk management is an essential part of trading, and having the right tools in place can help
to keep losses to a minimum. Stop-loss orders can limit your exposure to potential risks by
determining what amount of loss is acceptable to you before automatically exiting the trade.
Other risk management tools, such as take-profit orders and trailing stops, help to maximise
your chances of doing well by allowing you to close trades when they reach a certain price
level automatically. Utilising these risk management tools can reduce negative emotions
associated with trading, as it can provide reassurance that your losses are limited and that
your trades are optimised.