Anger – Leads to revenge trading and trying to get even after a losing trade.
Fear – The inability to take an entry or hold a winner in a trend due to the fear of a loss after entry or a winning trade giving back profits.
Disgust – Can lead to a loss of confidence after feeling disgusted with your own lack of discipline or the market’s price action.
Happiness – Surprisingly, happiness can lead to trading too big and taking on too many positions. This usually happens after a big winning trade or a winning streak when euphoria starts interfering with a trading plan or system.
Sadness – Can lead to difficulty taking the next trade entry or cutting a loss. This often occurs after a big loss, a string of losses, or a significant drawdown in trading capital.
Surprise – A surprise event can lead to making decisions based on emotions and abandoning a trading plan when the unexpected happens.
Neutrality – Trading requires work and only passion and energy can drive you to do the required homework that leads to success. You need the energy of passion to stay focused and do the work; apathy won’t cut it in trading.
Anxiety – Can lead to exhaustion from excessive stress. Confidence in yourself and your system can help overcome internal anxiety.
Love – If you truly love trading the markets, time is your path to success. But loving trading for the wrong reasons, like trying to get rich quick, can be destructive.
Depression – Leads to abandoning trading altogether. You can recover from financial losses, but emotional ruin is harder to bounce back from.
Contempt – Contempt for the markets or other traders results in bias and poor decision-making.
Pride – Leads to trading too big, not cutting losses quickly enough, and wanting to be right more than being a rational trader with a plan.
Shame – Makes it difficult to talk to others about your trading or even look at your account balance due to bad decisions.
Envy – Envy leads to external focus instead of the internal focus needed for successful trading.
Trading is only successful long-term when it’s done using our rational mind. Emotions are only valuable if they generate the energy to take us where we truly want to be. Emotions are positive when they protect our psychological boundaries, but they can be detrimental if they just fuel an out-of-control ego. Emotions cannot be avoided, so we must be mindful of them. We must be aware of our emotions and understand the messages they are sending. Emotions must be felt because suppressed emotions will show up in negative ways later. Emotions are great tools at times, but terrible masters.