Some recent studies found that traumatic events are burned in our memories when there is a large amount of adrenaline in the human body. And we humans release adrenaline when we are scared or angy. Fear and anger are feelings that are also present when trading because we put our capital and our egos at risk. It is very easy to go off tilt in a bad trading day if we get angry and begin to revenge trading or to miss obvious trading opportunities when fear of loss strikes and we become paralyzed.
What I’ve had to do in the past few years is to modify how I react to those emotions during trading. I continue to feel those same emotions, but I now have tools to help me cope with them and stay in the game. To modify bad trading behavior I first had to identifying bad trading patterns and target them one at a time. That was not easy so I wrote the Stock Trade Journal software to help me. First I began by writing detail descriptions of the thoughts and strong feelings during trading and I looked for bad trades to see what emotions surrounded the bad trading behavior that needed to be modified.
Next I came up with a training plan, a routine to modify the behavior like limiting the maximum number of trades for over trading. That in turn made me more aware of the emotions that were pushing me to place risky trades. I wrote detailed descriptions of those feelings as well as the trade setups I was seeing and their outcomes. Every weekend I would go back to the journal and read all my notes aloud and analyzed my performance for the week and fine tuned my trading strategies.
I still do that every day and every week with different aspects of my trading and it is proven to be most profitable.