EMOTIONS AT WORK

“When dealing with people, let us remember that we are not dealing with creatures of logic.
We are dealing with creatures of emotion, creatures bursting with prejudices and motivated
by price and vanity.”
Dale Carnegie
Intelligence, knowledge and talent have to be applied. Any person who is successful knows
that application requires discipline, self-control and confidence in one’s abilities. Björn Borg
was a great tennis player, he had talent. However, what always gave him the edge when
playing was his mental control, which earned him the nickname “Iceman”. He combined
talent and discipline to achieve his success and you must do the same.
We are all put in situations where, after they have occurred, we look back and feel that if only
our emotional control had been better. You are going for a job interview and role- play with a
friend beforehand. You come over as assertive and confident. In the interview itself,
however, the confidence goes. You practise a best man’s speech, it flows well and sounds
great; however, on the day, delivery suffers as you feel nervous and shy.
All the above we can associate with. The fact of the matter is, when the pressure is on, our
actions are influenced by our emotions. The more important the scenarios, the greater the
influence will be.
Trading is no different. As soon as money is committed, logic can go out of the window and
basic emotions take over. Consider the difference between paper trading and trading real

time. Whilst paper trading, you earn very good profits, you are confident and optimistic. You see a very lucrative business opportunity, so you now decide to open an account and trade for
real.
On studying your charts you see an opportunity, a perfect double bottom and prices low in
historical terms, now is the time to buy. You ring your broker to place the trade; however, the
overwhelming confidence of paper trading has now deserted you. Perhaps you had better
double-check the formation. After much deliberation you decide to phone the broker and the
trade enters the market. For the next two days prices rise dramatically, your profits grow; you
feel great, what an easy way to make a living. The next day prices drop and your profits are
cut in half. You feel uncertain; perhaps you should take the profit now before it gets away.
You decide to wait. The next day prices fall further and close below your mental stop loss.
Your system is telling you that you should be cut. However, you only have a small loss and it
should turn around and you will soon be back in profit. The next day, to your horror, prices
have collapsed and the majority of your equity is now lost. Your reaction is now one of
anger, why didn’t you bank the profit when you had it! The market’s move is totally illogical,
you feel anger, pain and frustration, you are now totally disillusioned and fed up, and all you
want to do is exit the trade.