Trading 112: Managing Emotions in Live Trading (Live Trading Psychology) / 1. Why Emotions Affect Live Trading

Key Psychological Challenges in Trading:

🚨 Fear – Hesitating to enter trades or closing winners too early.
🚨 Greed – Overtrading or holding trades too long for bigger profits.
🚨 Revenge Trading – Taking impulsive trades after a loss.
🚨 Overconfidence – Increasing risk after a few wins.

📌 Example:

• In demo trading, you easily execute trades without hesitation.
• In live trading, fear stops you from entering good trades or makes you exit too early.

✅ Understanding and managing emotions is key to becoming a consistent trader.

2. How to Control Fear in Trading

Fear occurs when traders:

• Doubt their strategy.
• Focus too much on money rather than execution.
• Have experienced multiple losing trades.

How to Overcome Fear:

✅ Trust your strategy – If backtesting & demo results show profitability, follow it in live trading.
✅ Accept risk before placing a trade – Predefine SL, TP, and lot size so no surprises occur.
✅ Detach from money – Focus on executing good trades, not on profits or losses.

📌 Example:

• You plan to enter a trade but hesitate because you fear losing.
• Solution: Review your checklist, trust your plan, and accept the outcome.

✅ A trader who fears losing will never fully execute their edge in the market.

3. How to Control Greed in Trading

Greed can lead to:

• Holding trades too long hoping for extra profits.
• Overtrading because of FOMO (Fear of Missing Out).
• Increasing lot sizes after wins in an attempt to “go big”.

How to Control Greed:

✅ Stick to your TP & SL – Set predefined exit rules.
✅ Follow your daily trade limit – Don’t take unnecessary extra trades.
✅ Avoid “all-in” mentality – Trade consistently, not aggressively.

📌 Example:

• You planned to take 3 trades today, but after winning 2, you take 5 more hoping for more profit.
• Result: You lose 3 trades and end up negative.
• Solution: Follow your daily limit and stop trading when planned.

✅ A trader who chases extra profit often ends up losing what they gained.

4. How to Avoid Revenge Trading

Revenge trading happens when traders try to “win back” losses immediately after a bad trade. This leads to rushed, emotional trades.

How to Stop Revenge Trading:

✅ Accept that losses are part of trading – No strategy wins 100% of the time.
✅ Step away from the charts after a losing trade.
✅ Stick to your daily max loss limit – Stop trading when reached.

📌 Example:

• You lose 2 trades in a row and decide to double your lot size on the next trade.
• You lose again, making the loss even worse.
• Solution: Accept the loss and stop trading for the day.

✅ One trade should not define your week or month – think long-term.

5. How to Manage Overconfidence After Winning Streaks

Winning trades can lead to overconfidence, making traders:
 🚨 Increase risk too fast.
 🚨 Trade without following their plan.
 🚨 Assume they “can’t lose.”

How to Stay Grounded:

✅ Stick to the same risk-per-trade (% of account size).
✅ Follow the same checklist, even after multiple wins.
✅ Don’t change strategies after short-term success.

📌 Example:

• A trader wins 5 trades in a row and decides to triple their lot size on the next trade.
• They lose, wiping out all their profits.
• Solution: Keep risk consistent regardless of recent results.

✅ Confidence is good, but overconfidence destroys accounts.

6. Developing a Winning Trading Mindset

A. Shift Focus from Money to Execution

• Instead of thinking, “How much will I make?”, think “Did I follow my plan?”
• View trading as a process rather than a quick way to make money.

B. Accept that Losses are Normal

• Losing trades are part of every strategy, even profitable ones.
• No need to fear a losing trade if your system has an edge.

C. Maintain a Balanced Lifestyle

• Don’t obsess over charts – take breaks, exercise, and relax.
• Avoid trading under stress (lack of sleep, personal issues).

📌 Example:

• A trader who focuses only on money experiences stress & fear.
• A trader who focuses on execution follows their plan with confidence.

✅ A professional trader focuses on consistency, not quick profits.

7. Using a Trading Journal for Emotional Control

To improve trading psychology, track your emotions in your trading journal.

Emotional Trading Journal Template

📌 End-of-Week Review:

• Did emotions affect my trades?
• Did I follow my trading plan, or did I hesitate?
• How can I improve next week?

✅ Reviewing emotions helps eliminate bad habits.

8. Daily Rituals for Mental Strength in Trading

🔹 Pre-Market Routine
 ✅ Review your trading plan before opening the platform.
 ✅ Take a deep breath & remind yourself to follow your checklist.

🔹 During Trading
 ✅ Only take trades that meet your strategy criteria.
 ✅ If you feel emotional, step away from the charts.

🔹 Post-Trading Routine
 ✅ Review journal and emotions.
 ✅ Detach from the market until the next session.

📌 Key Insight:

• Trading is a mental game – discipline and routine separate profitable traders from losing ones.

Conclusion: What You Should Learn from This Lesson

✅ Fear, greed, and revenge trading can ruin profitability if not controlled.
✅ Following a structured trading plan eliminates emotional decision-making.
✅ Winning and losing streaks should NOT affect risk management.
✅ A trading journal helps identify emotional weaknesses and improve over time.
✅ Mental discipline is as important as strategy in trading success.