Trading Stocks With Your Emotions Under Control | Podcast Episode #18

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Learn to trade, stocks successfully, learn to profit consistently. I’m Ryan Mallory and on my weekly podcast, I’m going to teach you the in and out of a complex ever-changing stock market. You will learn to trade better trait, smarter and profit bigger.

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Now let’s go trade. Hey everybody, this is Ryan. Mallory doing another podcast with you guys today and today, I’m going to talk about keeping control of your emotions and the stock market, man. This is this is such a hard topic to tackle because it’s really one of the number one issues that plagues Traders and it filters into all of their other decision makings.

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In terms of strategy, terms of using stop losses and keeping risk from getting out of control and knowing when to take profits, Controlling the emotions. It is such a big deal. Now, they talk about the two main components of emotions. When it comes to the stock market, fear and greed, fear is what from the markets perspective of what drives price down greed is what drives drives price up.

1:13
Now on the more personable side Fear and greed plays a large role and it causes us to sell too quickly to buy Too Much from the greed standpoint. When the markets down and you’re losing a lot, you can be buying something just out of greed because you have to make that money back.

1:31
Now in the same note, You can be buying something out of fear as well, because often times when the market selling off were trying to project when the market is going to bounce again. And instead of waiting for a more definable pattern to emerge, we buy out a fear.

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So in the same situation, one Trader can be buying for greed when other Traders can be buying for fear, and they can both be wrong. And that’s the perplexity of the stock market, and the task that’s before us, and that is to To control our emotions. Now, you also hear people say If you’re a good stock Trader, you have no emotions.

2:12
That’s not true. We’re human beings. We have emotions. I have emotions when I’m trading. You have emotions when you’re treat. You can’t get rid of the emotional aspect of trading one. Nobody likes to lose on a trade to everybody likes to win three. Nobody likes to lose money for everybody likes to make money.

2:31
So You’re not going to get rid of the emotional aspect that comes with trading. What you have to do, is control the emotional aspect that comes with trading, and that’s the biggest task before you. Now, if you try to act like that, you’re not emotional.

2:47
Then there’s something wrong with you. I mean, I think you’re probably being dishonest with yourself or you might have, you may need to go to see a psychiatrist or something about that. But nonetheless, we’re going to have emotions as it comes to trading. Now, like I said, how you control it is, what’s going to Define your success in the stock market.

3:09
So, if you get anxious, if you have trouble sleeping at night, you need to address that if you’re having problems with the fear of missing out, or if your Always trying to push a trade for that last penny. Only to see it. Fall back on you and you lose more money than you would have lost.

3:28
Had you just take him to the prophets when you had the chance, there’s something there that you need to address there. So many elements to the emotional side of trading and its really an entire subject in and of itself. And we can’t expect to be able to just tackle this all in one particular podcast, but I’m going to try and go through some of the main aspects of in what’s helped me.

3:48
Now, I’m not going to say that I’ve never had a And even recently when I’m trading, because I do. But the thing is, I don’t let them overtake me. I think the last time that a trade really got me upset was and people in the Trading Block will know about this because it was, it was really, really upsetting, it was a Friday afternoon and this was probably about two years ago now, a Friday afternoon.

4:15
And we were long on LinkedIn, stock feet. For those who, don’t remember that symbol was Ellen, K T and we really hadn’t gone anywhere in the trade and there was an afternoon sell-off in the last 30 minutes and we got stopped out of Ellen, Katie for like one and a half percent loss.

4:34
I can’t remember the exact number of that. We took a loss on that trade but it was around that that area about a one and a half percent loss. Okay. I’m fine that that’s nothing to get too worried about. Well, I woke up Cup, Monday morning, and I literally thought I was still in a dream. I wake up to see the news that Microsoft had bought LinkedIn in the stock is up, 60% in the pre-market.

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Now let me repeat that again for you. It was up 60 60 percent in the pre-market on a Monday morning. Now flash back to Friday. It’s 3:30 p.m. eastern time. 30 minutes left of trading, all of a sudden I get stopped out of it.

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So are you going to sit there and tell me that you shouldn’t have emotions when you deal with something that crazy? No, you’re going to have emotions, man. I was mad. I was really mad. In fact, it took me a while to get over that, not from a training standpoint, to where I couldn’t trade.

5:36
I was just very upset about the fact and I had nobody to blame. I didn’t have myself to blame. I didn’t have the market, the blend it was really I was executing. I trading strategy and trading strategy wasn’t fought. It just happened to have an unfortunate circumstance that played out the next day after getting stopped out of any other stock that I’ve been stopped out of before except this one happened to get bought out the next day.

5:57
So yeah, it was, it was upsetting I mean, may or may not have had a keyboard that survived that particular day, it was really. I can’t even tell you. I mean, even now when I think about it, it gets me irritated because that was a big profit opportunity right there.

6:14
Any time you can benefit 60% instantaneously off of a stock. That’s a big deal. So, there was a motions there. There was that part of me that wanted to figure out something to blame somebody that did this to me but there wasn’t and the emotional side, that’s the emotional side.

6:36
That’s the emotions coming out that feels like that you’ve been victimized or that you’ve been done wrong. But in the, in the stock market, they’re the market doesn’t do you wrong. It’s just, that’s the way things play out sometimes, and it’s unfortunate. And in this case, it was a big unfortunate would have been a nice profit to have had.

6:56
So that’s that’s my biggest example. That was the one time where Yeah, I slam my fist down on the keyboard because I was just so upset about that and luckily, I had another keyboard waiting in the wings. And that’s not something that I, that I do or have done but, you know, since then.

7:13
But that was a moment where it really caught me off guard. And I think for anybody they’d be upset by that. So but when it comes to trading, that’s a big outlier. Okay, getting stopped out 30 minutes before a stock gets bought out by a big company, okay?

7:30
That’s an outlier and Nobody’s going to feel the emotions with that, but if it’s the day to day trading, that’s where you really got to harness it in. That’s where recognize where your shortcomings are as a Trader realize, okay? Do I have a problem with losing? Do I have a problem with being too greedy, on my trades, where, I don’t want to move up, my stop loss is because I’m afraid that’s a emotion that I’m going to get stopped out erroneously and then only see the stock bounced, right back and go to new all-time highs or whatever, that’s an emotion that you got to address.

8:02
Are you staying awake at night? Are you feeling anxious? Are you finding yourself having to constantly check Futures? That’s an emotion that you have to deal with. Now, I understand the Curiosity standpoint of when the markets closing, hey, what’s the future is doing? And wanting to check that out.

8:28
But if you find yourself every 30 minutes, updating a page on your desktop, or if you’re going onto your mobile and checking your Brokers to see what the Futures are doing, That’s that’s a problem there.

8:54
I don’t I don’t feel the need to constantly check it because there’s really nothing I can do right now because the markets closed. So why worry? And when I wake up in the morning that’s usually one of the first things I do to see what the future is did overnight. And if there are some big price action, I, you know, that’s taken place where the markets will be down our way up.

9:09
I’ll check it out to see. You know, what’s the driver behind that? But I’m not going to let the anxiety get to me. So, the key here with, with any kind of trading is recognizing that the emotions exist like we already talked. About knowing your shortcomings as a Trader, then also knowing that you can’t let it control your decision-making.

9:29
So there’s times where The market sitting on a strategic support level and I have stocks. That might be taking a beating over the last couple of days, but the market is showing signs of possibly balancing, but there’s another set of he’s like, I just want to get out while I can.

9:47
I don’t want to take the losses anymore. I don’t like it. Let’s just go ahead and sell here. Look at that. That’s an emotion of fear. There’s also probably an element of greed to of like I just don’t want to put any more of my Capital at risk. And I’m not going to follow my trading plan by sticking to the stop loss.

10:07
Now I have to ask myself what is controlling this emotion? What is the driver Behind these feelings? And so oftentimes I’ll ask myself that I’ll say to myself. Hey this is how I’m feeling I acknowledge that the feeling exists and by the way guys I’m not a psychologist or a psychiatrist or anything else.

10:26
This is just simply things that have helped me in the past and things that I’ve read about and explored. Found that these were some helpful tools as well, but for me, I acknowledge that the feelings exist. Okay? I am scared right now that the markets going to collapse, okay? Or I’m saying I have this overwhelming greed, that I’m just going to make so much money on this tray.

10:47
And I acknowledge that too, because that’s, that’s a feeling of greed, right there and I acknowledge it, and then I said, okay, but then, what is the charts telling me, what is the price action on the stock market telling me? And then I will go with that and more times than not? I am.

11:02
Correct. Almost, every time I am correct by one acknowledging that the feeling is this and what they were telling me, but then I’m also acknowledging. What is the market tell me? And I go with the ladder, I go with what? The markets tell me. I go with what the charter tell me. Because that’s really the emotionless aspect of trading.

11:19
Because the market is, while the participants in the market are very emotional. The market itself is unemotional, it’s not picking on one individual person. It’s going to treat everybody the same and it’s going to to wipe out. anybody that are, that’s on the wrong side of the trade and it’s going to Reward the people who are on the right side of the trade.

11:38
So we as Traders have to constantly be asking ourselves. What is my emotions? Tell me to do on this particular trade versus what should I be doing on the street? Where are the charts? Tell me to do, and you’ll find that almost every time with the charts and what the market is telling you to do is the right call.

11:57
There’s another aspect of trading that I’ve always found interesting and that is people who say, I just got to go with my gut. I got to go with my gut on this. Or those are say, I got this gut feeling that I need to hold it out. I’m going to sticking it through. We’ll surprise. That’s your emotions playing with you and you shouldn’t be listening to what your guts telling you.

12:16
Because what you’re better off doing is following the lead of the market. If the markets breaking down critical through critical support and there’s no support underneath it. It’s a good time to start booking some profits on some of your profitable trades. If the market is breaking out and you’re up 10 percent on the trade.

12:32
And it’s shown a lot of volume Point into the market. That’s probably not a good time to sell your stuff. Socks. Okay, regardless of what your feelings are telling you, because oftentimes, you’re thinking about the dollars associated with the trade, you’re thinking about what you could be doing with that money or how much money it is.

12:48
Those are all motions. You need to be trading within your comfort zone in terms of your position size, but you also need to be making your decisions based off of what the market is telling you and not what your emotions were in this particular case, what your gut instinct is telling you Finally, the last example is as being the hero in the market.

13:07
We especially among guys, I find this more prevalent than than anything is the need to be a hero, the markets falling and I’m just going to buy and there’s this old saying that Warren Buffett’s attributed with for saying that I’m not quitting it exactly.

13:24
Correct. But basically buying when everybody else is selling and selling, when everybody else is buying and there’s there’s elements of Truth to that. But people start to use the take on the hero complex to think that they need to buy when the markets, you know, selling off and hasn’t even stabilized yet trying to nail the bottom.

13:43
Well, there’s plenty of time for bottoms to form and you can wait for that bounce. And for a base of warm before you start getting long but you don’t need to do it while the markets and free fall, but a lot of Traders will do that. They will try to be the hero.

13:59
They will try to hold on longer than they should. They’ll put their profits at risk. And in the end, they just have a big fat whopping loss to show for it all. Because they tried to take on that hero, complex of trying to do the thing that nobody else wanted to do.

14:18
So just to summarize, Yes, trading is emotional, you have emotions, you have fear, you have greed, you have anxiety, you have ego. You have things that are inherent about you that can cause chaos in your trading. Now, it doesn’t mean that you deny that there are even existing within you.

14:40
You don’t deny their existence. You accept the fact that you are an emotional person, whether or not you have some emotions that are super strong or some emotions, that are less less notable.

14:56
Okay, Bo. Aware of the fact that you have emotions now, people’s emotions range from person to person and everything, but as humans made by God, you do have a motion so recognize that they exist. And then ask yourself, okay, this is what my emotions are telling me, but what is market?

14:56
Tell me you’re going to find that. When you do that, when you recognize the fact that your emotions may be telling you, one thing that your gut instinct, maybe telling you another that ultimately what matters is what the market is. Telling you, thanks for listening to this week’s podcast of Swing Trading And Mallory I’d like to encourage you to join me in the SharePlanner Trading Block where I navigate the financial markets every day with Traders from around the world.

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And follow me at SharePlanner on Twitter and on SharePlanner’s, Facebook page, where I provide unique market, and trading ideas every day. If you have any questions, please feel free to email me ryan@shareplanner.com, all the best to you and God bless.