How to cope with emotion running high in a volatile market?
Even during calm times, trading in the financial markets can be stressful and have an emotional impact on traders. These challenges are even more pronounced in volatile markets, when there are far more unknowns and there is a fear of market instability. These may lead traders to feel stressed, anxious, and fearful. Since traders can't control the market, the way to deal with these challenges is to learn techniques you can control. To help mooers with exploring different techniques, we asked other mooers what they do.
One of our mooers @Mcsnacks H Tupack suggested using the Paperfolio feature to find out the top stocks of an investor you follow and see how well you are doing against everyone else.
@doctorpot1 stressed the necessity of utilizing systems to combat negative thoughts.
@bullrider_21 advised that sticking to your trading plan and discipline might be a good way to tackle these challenges.
@doctorpot1 stressed the necessity of utilizing systems to combat negative thoughts.
@bullrider_21 advised that sticking to your trading plan and discipline might be a good way to tackle these challenges.
How did mooers overcome mental obstacles? Let's take a look!
@ZnWC : I'm sure everyone who traded stocks will face our greatest enemy: emotional trading such as panic sell, FOMO (fear of missing out) and greed.Emotional trading generally hurts investors hence we must avoid it at all cost. Below are some suggestions:
TA (Technical analysis)You can attempt to forecast price trend by studying indicators (MACA, BB: Bollinger Band), candle sticks pattern, MA (moving average), trend line and reversal pattern (triangle, head & shoulder, TDS9 etc). TA can help boost your confidence in trading.
FA (fundamental analysis)Know the company by reading analysis data and company's earnings. Understand the macro conditions and buy or sell stocks based on fundamental and not share price.
Investment goal and planWhy do your invest?What is your profit margin or ROI target?What is your stop loss limit?How much emergency fund to keep?How do your diversify your investment?What's your risk level?Set you investment plan by asking the above questions. Stick to your goal and plan to avoid greed - avoid YOLO all your hard earn money and invest within your mean. There's nothing wrong to invest in something with a potentially low return but relatively stable (high return=high risk).
TA (Technical analysis)You can attempt to forecast price trend by studying indicators (MACA, BB: Bollinger Band), candle sticks pattern, MA (moving average), trend line and reversal pattern (triangle, head & shoulder, TDS9 etc). TA can help boost your confidence in trading.
FA (fundamental analysis)Know the company by reading analysis data and company's earnings. Understand the macro conditions and buy or sell stocks based on fundamental and not share price.
Investment goal and planWhy do your invest?What is your profit margin or ROI target?What is your stop loss limit?How much emergency fund to keep?How do your diversify your investment?What's your risk level?Set you investment plan by asking the above questions. Stick to your goal and plan to avoid greed - avoid YOLO all your hard earn money and invest within your mean. There's nothing wrong to invest in something with a potentially low return but relatively stable (high return=high risk).
@meruson : to help avoid psychological challenges, only invest with money you can part with and consider applying automatic investment system where you add shares at each predetermined percentage drop or at support zones if you know technical analysis. this way you conserve your capital while the stock is strongly downtrending. do take profit at predetermined percentage intervals or at resistance zones if you know technical analysis. this way you have capital to be in position to possibly buy the dip. only applies to stocks in an index or warren buffett would approve. bon courage.
@bullrider_21: When a trade turns against you, the fear of losing your hard-earned money drags you into delaying the realisation of a loss, which eventually can turn into bigger losses.
Greed comes a close second to fear. Greed strengthens the gambling mindset. A trader makes impulsive decisions in pursuit of profit. After a few positive trades, you may become overconfident. You may queue to sell at too high a level and the price fell before that level. So you missed selling when there was extreme greed.
To solve the psychological challenges, you need to have a trading plan and discipline to stick to it. You can prevent fear by improving your TA skills and being disciplined in cutting loss at a percentage level you're comfortable with from your buy or sell prices depending on whether you go long or short. You may be greedy when you try to sell at a high resistance level. To prevent greed, consider selling at a reasonable level that is reachable.
Greed comes a close second to fear. Greed strengthens the gambling mindset. A trader makes impulsive decisions in pursuit of profit. After a few positive trades, you may become overconfident. You may queue to sell at too high a level and the price fell before that level. So you missed selling when there was extreme greed.
To solve the psychological challenges, you need to have a trading plan and discipline to stick to it. You can prevent fear by improving your TA skills and being disciplined in cutting loss at a percentage level you're comfortable with from your buy or sell prices depending on whether you go long or short. You may be greedy when you try to sell at a high resistance level. To prevent greed, consider selling at a reasonable level that is reachable.
@doctorpot1: We as investors knows that we generally make the most money in a bear market, buying stocks of great company at lower valuation. However, when the time comes, we all chicken out. We start to doubt and fear that price will crash further, and we cower.Fear is stopping us from moving forward. As human fear stop us from achieving great heights. Want to start a business that may revolutionise the world? Fear of failure comes in and stop us. Want to quit a job that is costing us our health and relationship, fear of not being able to pay our bills comes in and stop us.Like many of us, I do have fear when buying the dip. When the price of stocks goes way below my entry price, sometimes I hesitate. This is the same when price of a stock sky rockets, when greed kicks in. Where I hesitate to sell when price rally, just for the hope that the price could fly further.So instead of fighting with fear and greed, I use systems to replace it.
@Mcsnacks H Tupack: An unused feature that I enjoy using is the Paperfolio. What better way to find all the top stocks of an investor you follow. This will also give you an idea of how well their choices in investments are doing in the market. It does have a few bugs in it like when $HUB Cyber Security(HUBC.US)$ merged it stuck the acquisition company in my portfolio so I couldn't remove it and it's percentage so I had to delete the entire portfolio. It can also be used to see how well you are doing against everyone else although most aren't really using it like that.
We hope these insights from the community can offer you new perspectives on how some ways to approach challenging situations. We want you to remain resilient and motivated even in the face of loss. As one of our mooers, @BeckyBoo, wisely noted, "It is important to stay neutral after losses and not to become emotional".
If you have experienced a similar problem or experience, check out this post and feel free to share your thoughts in the comment section.
Have you encountered any psychological challenges when you trade? If you have, how did you solve them?
Have you encountered any psychological challenges when you trade? If you have, how did you solve them?
Disclaimer: This presentation is for information and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. See this link for more information.
All contents such as comments and links posted or shared by users of the community are the opinion of the respective authors only and do not reflect the opinions, views, or positions of Moomoo Financial Inc., Moomoo Technologies, any affiliates, or any employees of MFI, MTI or its affiliates. Please consult with a qualified financial professional for your personal financial planning and tax situations.Moomoo may share or provide links to third-party content. Doing so is intended to provide additional perspective and should not be construed as an endorsement or recommendation of any chat room, channel, services, products, guidance, individuals, or points of view.
All contents such as comments and links posted or shared by users of the community are the opinion of the respective authors only and do not reflect the opinions, views, or positions of Moomoo Financial Inc., Moomoo Technologies, any affiliates, or any employees of MFI, MTI or its affiliates. Please consult with a qualified financial professional for your personal financial planning and tax situations.Moomoo may share or provide links to third-party content. Doing so is intended to provide additional perspective and should not be construed as an endorsement or recommendation of any chat room, channel, services, products, guidance, individuals, or points of view.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Mcsnacks H Tupack : Using the paperfoolio also enhances your paper trading skills. Keeps you mindful of the movement of multiple stocks so you can recognize patterns better and have a wide selection of promising investments.
productivity Mcsnacks H Tupack: very insightful
intuitive Jackal_354 : get a life
Bisco : Wow! Amazed by your insights
Betterthangold : Bottom line, if you’re not regularly taking profits, you’re continually losing money. Capital preservation is key. Don’t remain Diamond handed, dumb money.
Themadmancox : personally for me I really do like paper trading but I need to do it in an environment that is absolute to the actual Market like I need to be able to trade credit spreads debit spreads iron Condor basically complex strategies this is what I'll be doing in the regular Market if I can't do it in paper trading if I can't get prepared prior to getting into the regular Market I might as well be in the regular Market which I am.
Themadmancox : almost any idiot can buy and sell regular basic options especially with a million dollars in your account that's not realistic but again I am a fan of paper trading.
Mark McG : smoke weed every day
決然的凱特 : Steadfast holding.
TickerTapeParade : F$$k this loser a$$ “emotional” shit post.
When you make money, someone else lost their money & vice versa.
You signed up for the risk, so have the balls to invest, “or don’t” like most of the population.
Wallstreet doesn’t need a bunch of Sissy’s. Your feelings don’t matter here. So keep it Movin. Once again, if your worries are about “your emotions”… so do Yourself A Fkin favor and admit it- you can’t handle it. It’ oKay- go live your life, this wasn’t for You. Take care!!!