How to Overcome Emotions in Selling Stocks?
Do you know why pro traders keep on maintaining their portfolio with a maximum no.
of winning trades and amateur traders struggle to maintain the consistency in winning trades? Pro traders know when to exit from a stock even if it's in a losing position.
They would be ready to lose in a single trade and try to compensate the loss in their next trades because they think about their trading career for long term.
But amateur traders think only about the single trade which is in a losing position and forget about good opportunities in future trades.
All the pro traders have one quality in common.
They know how to overcome emotions especially when selling their stocks.
Only two emotion factors control novice traders during selling the stocks - Greed and Fear.
But we can force our mind power to take control of those emotions instead of letting them to take control of us.
1.
Building a Money management system will build your confidence level - Trading system can help you in entry and exit of stock but only the money management system tells you when to cut your losses.
2.
Setting Stop loss - Some traders hate to set stop-loss because of two reasons; they are too cocky, thinking the stock would not go in downtrend phase and the second reason is that when your stop loss is hit, it sends you a message that YOU LOSE.
But the actual fact is Stop-loss is a life saver.
Stop-loss saves our capital amount for our next trades.
How can you force your mind to sell the stocks? When I started trading, I had a problem in selling stocks.
When my stocks were going down, I hesitated to sell and wanted to hold my positions until it regained its momentum.
On the other side, when stock price was rallied, I kept holding it to take huge amount of profit but unfortunately stock price dropped and I had to sell it for a small profit.
Then later, I realised to build some plan to sell stocks against my emotions.
Below are the tools I followed to sell stocks with no hesitations or in double mind.
1.
When you buy a stock, next moment call your stock broker and request him to update the stop loss - You should find the stop-loss price using money management system and request your broker to place stop-loss for you.
2.
Find the Price Target - I like this quote "You cannot achieve your goal without a realistic target".
This applies to traders too.
Try to find the price target using your trading system or Fibonacci tool like fibonacci extension can help you to find the price target.
Write the selling price on a "piece of paper" and stick it on your computer monitor screen.
This activity would keep your mind to focus on the selling price rather than your emotions.
This worked for me! 3.
When you see your stock rallies, do not hesitate to follow the price by setting Trailing stop loss.
When you have trailing stop-loss in right place, it is most likely guaranteed that you would own some profit.
Keep raising your trailing stop-loss when the stock price rises.
Trailing stop loss definition - It is a stop-loss order set at some fixed percentage below the market price.
It allows you to let the profit run while cutting loss at the same time.
During my early trading career, I followed all the above methods to overcome emotions while selling my position.
Then later, I got used to it and it became a habit to me, finding no difficulties in selling my stocks at the right time.
of winning trades and amateur traders struggle to maintain the consistency in winning trades? Pro traders know when to exit from a stock even if it's in a losing position.
They would be ready to lose in a single trade and try to compensate the loss in their next trades because they think about their trading career for long term.
But amateur traders think only about the single trade which is in a losing position and forget about good opportunities in future trades.
All the pro traders have one quality in common.
They know how to overcome emotions especially when selling their stocks.
Only two emotion factors control novice traders during selling the stocks - Greed and Fear.
But we can force our mind power to take control of those emotions instead of letting them to take control of us.
1.
Building a Money management system will build your confidence level - Trading system can help you in entry and exit of stock but only the money management system tells you when to cut your losses.
2.
Setting Stop loss - Some traders hate to set stop-loss because of two reasons; they are too cocky, thinking the stock would not go in downtrend phase and the second reason is that when your stop loss is hit, it sends you a message that YOU LOSE.
But the actual fact is Stop-loss is a life saver.
Stop-loss saves our capital amount for our next trades.
How can you force your mind to sell the stocks? When I started trading, I had a problem in selling stocks.
When my stocks were going down, I hesitated to sell and wanted to hold my positions until it regained its momentum.
On the other side, when stock price was rallied, I kept holding it to take huge amount of profit but unfortunately stock price dropped and I had to sell it for a small profit.
Then later, I realised to build some plan to sell stocks against my emotions.
Below are the tools I followed to sell stocks with no hesitations or in double mind.
1.
When you buy a stock, next moment call your stock broker and request him to update the stop loss - You should find the stop-loss price using money management system and request your broker to place stop-loss for you.
2.
Find the Price Target - I like this quote "You cannot achieve your goal without a realistic target".
This applies to traders too.
Try to find the price target using your trading system or Fibonacci tool like fibonacci extension can help you to find the price target.
Write the selling price on a "piece of paper" and stick it on your computer monitor screen.
This activity would keep your mind to focus on the selling price rather than your emotions.
This worked for me! 3.
When you see your stock rallies, do not hesitate to follow the price by setting Trailing stop loss.
When you have trailing stop-loss in right place, it is most likely guaranteed that you would own some profit.
Keep raising your trailing stop-loss when the stock price rises.
Trailing stop loss definition - It is a stop-loss order set at some fixed percentage below the market price.
It allows you to let the profit run while cutting loss at the same time.
During my early trading career, I followed all the above methods to overcome emotions while selling my position.
Then later, I got used to it and it became a habit to me, finding no difficulties in selling my stocks at the right time.
Source...