How to Manage Emotions in Trading

06/20/2011 8:00 am EST


Rande Howell

Founder and Owner, Trader's State of Mind

Trade psychology expert Rande Howell reviews some psychological steps that traders can take so that emotions play a less-intrusive role in their trading.

I’m speaking with Rande Howell today about managing emotions in the trading environment. Rande…a lot of people have fear, they have to manage their impulses, and then of course there’s anger. How do you suggest we deal with that?

Wow, that is a great question because it’s at the crux of successful trading. 

Ultimately, the very first thing is you have to begin, in my opinion, with a breathing practice. Where you learn how to breathe diaphragmatically, because breath actually is an element of emotion, in that if you’re in fear, you’re going to discover you’re holding your breath or you’re panting. 

What that automatically does is it cuts off oxygen supply to your brain—which means you’re no longer thinking—and it also accelerates heart rate. What that’s going to do is it’s going to trigger the adrenals, and suddenly, you have the chemistry of fear rampant in your body. 

You can disrupt the entire emotional state just by breathing. It’s not going to solve the problem, but it’s going to produce a calm state of mind. And from calm state of mind you can get to mindfulness.

And “mindfulness” is…?

Mindfulness is…it’s a sense of becoming an observer.

I would actually say people have a sense of detachment where they can observe things and they find themselves pretty neutral. 

They’re able to say, “Ah, look at me, I’m having these thoughts. They are not me.” I’m taking away my identity from those thoughts that say, “I’m a jerk, I’m inadequate, I’m never going to get out of this” or the thoughts that say “I’m going to lose, I’m going to lose; what if you lose?” 

You take that away and you begin to say “Wow, where are these thoughts coming from,” because ultimately, what you discover is that thoughts really are the voice of your beliefs.

Most traders have to confront their self-limiting beliefs to overcome fear and to become successful traders. 

By being able to monitor and observe the thought, you get to the self-limiting belief. That’s fun. 

Will the ego allow one to do that?

Not without a fight! It never wants to be exposed. 

The brain, it is going to form you into a comfort zone; that’s its job, and once that comfort zone is finished, it’s going to go back into the back of your awareness and it’s going to become a familiar pattern that’s outside of awareness, and it just keeps triggering. You make the assumption it’s you. It’s not you; it’s just one element of self.

  By clicking submit, you agree to our privacy policy & terms of service.

Related Articles on STRATEGIES

Keyword Image
MSG Networks: A Sporting Chance
12/12/2018 5:00 am EST

Validea is an advisory service which assesses stocks based on the investing criteria of many of the ...