The Concept of Trading Emotions

J

jinxu

One of the behavior patterns I've noticed in myself is that the longer I trade the worst my trades become. For example, the first one or two trade are usually good trades. Can either be a profit or a loss but at my rules.Then the next three or four I may break a rule or two. Then by the fifth or sixth I lost my discipline.

I believe this is a phenomenon due to myself having a limited supply of emotional self-control and that with each trades I made I spend some of this supply. And then I need to recharge to clear my head.

This is what I've been thinking lately and why I make bad trades. Wondering if everyone else experience this?
 
Yes. Chasing the market, disregarding rules, and acting impulsively can happen after a string of losses. This is the tough part.
 
jinxu said:
One of the behavior patterns I've noticed in myself is that the longer I trade the worst my trades become. For example, the first one or two trade are usually good trades. Can either be a profit or a loss but at my rules.Then the next three or four I may break a rule or two. Then by the fifth or sixth I lost my discipline.

I believe this is a phenomenon due to myself having a limited supply of emotional self-control and that with each trades I made I spend some of this supply. And then I need to recharge to clear my head.

This is what I've been thinking lately and why I make bad trades. Wondering if everyone else experience this?
More...
Maybe, as you trade you get more and more of an adrenaline rush from higher and higher dopamine levels...like gamblers do. Dopamine and serotonin levels need to stay in balance to have "self restraint" ability. Maybe you have a chemical imbalance, I don't know, but the first key is to tell yourself to not give in to this reckless behavior. It's time to say goodbye to immaturity and act with a professional attitude. Trading has no rules...you have to create all the rules and follow them...no one is going to do this for you. Do you want to be a statistic? Trading has a huge history of people "playing" games with their money and losing their whole account! Imagine a bartender that has been sober for years...now that's control. Trading can be the alcohol and you need to be the sober bartender. Treat your money and yourself with more respect...take it more seriously. GOOD LUCK!!!!!!!!!!!!!!!!!!
 
That's a problem of self-control we all experience at some point. The thing is you start to forget or ignore your own rules the longer and more difficult your trades become. I still haven't figured out how to avoid this control dissipation for myself, so I'd be really grateful for any words of advice about it (or perhaps links for some decent psychology articles on this topic).
 
BONECRUSHER said:
Maybe, as you trade you get more and more of an adrenaline rush from higher and higher dopamine levels...like gamblers do. Dopamine and serotonin levels need to stay in balance to have "self restraint" ability. Maybe you have a chemical imbalance, I don't know, but the first key is to tell yourself to not give in to this reckless behavior. It's time to say goodbye to immaturity and act with a professional attitude. Trading has no rules...you have to create all the rules and follow them...no one is going to do this for you. Do you want to be a statistic? Trading has a huge history of people "playing" games with their money and losing their whole account! Imagine a bartender that has been sober for years...now that's control. Trading can be the alcohol and you need to be the sober bartender. Treat your money and yourself with more respect...take it more seriously. GOOD LUCK!!!!!!!!!!!!!!!!!!
More...
Excellent reply. And yes, good luck because people usually don't change.

CM
 
It's either the market, or it's you. You can't fix the markets, but you can fix yourself.

Just be sure this is not expected behaviour from your trading plan, otherwise all the psychology in the world leads into a blind alley.
 
The brain makes up 1/ 50th of our body mass but consumes a staggering 1/ 5th of the calories we burn for energy. Most of our trading decisions are happening in our prefrontal cortex, the part of our brain responsible for focus, handling short-term memory, solving problems, and moderating impulse control. It’s at the heart of what makes us human and the center for our executive control and willpower.

In 2007 researchers did a study where they assigned tasks that did or did not involve willpower and measured blood-sugar levels before and after each task. Participants who exercised willpower showed a marked drop in the levels of glucose in the bloodstream.

Another study was done that involved two groups. Both groups completed one willpower-related task and then did another. Between tasks, one group was given a glass of Kool-Aid lemonade sweetened with real sugar (buzz) and the other was given a placebo, lemonade with Splenda (buzzkill). The placebo group had roughly twice as many errors on the subsequent test as the sugar group.

So what we can learn from this is that willpower is a mental muscle that doesn’t bounce back quickly. If you employ it for one task, there will be less power available for the next unless you refuel. That's why you can start off the day making good trades but then eventually see your decision making ability and discipline go right out of the window later in the day. To trade your best, you literally have to feed your mind, which gives new credence to the old saying, “food for thought.” Foods that elevate blood sugar evenly over long periods, like complex carbohydrates and proteins, are the fuel of choice to maintain a high level of critical decision making ability for trading throughout the day.
 
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Baron said:
The brain makes up 1/ 50th of our body mass but consumes a staggering 1/ 5th of the calories we burn for energy. Most of our trading decisions are happening in our prefrontal cortex, the part of our brain responsible for focus, handling short-term memory, solving problems, and moderating impulse control. It’s at the heart of what makes us human and the center for our executive control and willpower.

In 2007 researchers did a study where they assigned tasks that did or did not involve willpower and measured blood-sugar levels before and after each task. Participants who exercised willpower showed a marked drop in the levels of glucose in the bloodstream.

Another study was done that involved two groups. Both groups completed one willpower-related task and then did another. Between tasks, one group was given a glass of Kool-Aid lemonade sweetened with real sugar (buzz) and the other was given a placebo, lemonade with Splenda (buzzkill). The placebo group had roughly twice as many errors on the subsequent test as the sugar group.

So what we can learn from this that willpower is a mental muscle that doesn’t bounce back quickly. If you employ it for one task, there will be less power available for the next unless you refuel. That's why you can start off the day making good trades but then eventually see your decision making ability and discipline go right out of the window later in the day. To trade your best, you literally have to feed your mind, which gives new credence to the old saying, “food for thought.” Foods that elevate blood sugar evenly over long periods, like complex carbohydrates and proteins, are the fuel of choice to maintain a high level of critical decision making ability for trading throughout the day.
More...

Funny you should mention that. I am currently reading a book from 1988 called "Maximum Metabolism" and he says the exact same thing. It has a lot to do with elevating your metabolism too. Allegedly.
 
Baron said:
The brain makes up 1/ 50th of our body mass but consumes a staggering 1/ 5th of the calories we burn for energy. Most of our trading decisions are happening in our prefrontal cortex, the part of our brain responsible for focus, handling short-term memory, solving problems, and moderating impulse control. It’s at the heart of what makes us human and the center for our executive control and willpower.

In 2007 researchers did a study where they assigned tasks that did or did not involve willpower and measured blood-sugar levels before and after each task. Participants who exercised willpower showed a marked drop in the levels of glucose in the bloodstream.

Another study was done that involved two groups. Both groups completed one willpower-related task and then did another. Between tasks, one group was given a glass of Kool-Aid lemonade sweetened with real sugar (buzz) and the other was given a placebo, lemonade with Splenda (buzzkill). The placebo group had roughly twice as many errors on the subsequent test as the sugar group.

So what we can learn from this that willpower is a mental muscle that doesn’t bounce back quickly. If you employ it for one task, there will be less power available for the next unless you refuel. That's why you can start off the day making good trades but then eventually see your decision making ability and discipline go right out of the window later in the day. To trade your best, you literally have to feed your mind, which gives new credence to the old saying, “food for thought.” Foods that elevate blood sugar evenly over long periods, like complex carbohydrates and proteins, are the fuel of choice to maintain a high level of critical decision making ability for trading throughout the day.
More...
Good stuff Baron! I would like to add that complex carbs will keep your serotonin levels in balance. Like I was saying in other post, not enough serotonin and too much dopamine is a description of OCD people...they become compulsive and can't stop doing what their doing...turning door knobs over and over. Not good for trading! Just don't eat too many carbs at once, a sleepy trader is another problem!:D
 
jinxu said:
One of the behavior patterns I've noticed in myself is that the longer I trade the worst my trades become. For example, the first one or two trade are usually good trades. Can either be a profit or a loss but at my rules.Then the next three or four I may break a rule or two. Then by the fifth or sixth I lost my discipline.

I believe this is a phenomenon due to myself having a limited supply of emotional self-control and that with each trades I made I spend some of this supply. And then I need to recharge to clear my head.

This is what I've been thinking lately and why I make bad trades. Wondering if everyone else experience this?
More...

Sir you are right! If you don't follow your trading rules and let your emotions take over you are sure to lose that day. You have stay discipline! That is what I know. My broker over at Cannon, I follow his blog and he wrote this article once that helped me out. Might be a helpful read for you! https://www.cannontrading.com/tools/whats-your-trading-blood-type
 
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