Emotional overactiveness is simply our response to the profit and loss related emotions. Such as see, if you have profit you feel you can do everything feel happy and then enjoy your life. But when you get loss, then your mind also collect all the problems arise due to such loss. So this create a strong emotional response towards brain and psychology gets trapped. Psychology is disturb causing just focused on converting this loss into the profit.
But, While doing this, your emotions sees every candle as opportunity and end up losses. Because before market moves in any direction it takes a candle to back of direction to get fuel called as stop loss. So, the emotional things wont work, it is because market is fundamentally prepare to hit stop losses of the people.
So, emotional overactiveness is simply our body, mind and heart response towards profit and loss.
Reasons for emotional overactivess are,
- Lose of control over emotions, psychology.
- Loss of self control (sometimes we want to take control over the trading rather than the following our rules and the strategy.)
- No trust over process and strategy (we cant wait for profits and end up in the loss in eagering for faster profis.)
- Want quick money
- Not understanding of market dynamics, structure, pattern and no clue on how market works
- Just focused on the individual candle and assuming that this is the buy and again red candle this is the sell so it gets completely trapped
- Come in market just to prove and give try yourself, not having good attitude of making money, but want to earn money and get rich quickly
- No knowledge, understanding of market structure
How to prevent the emotional overactivess in trading.
- You should understand market structure. It means you should use your strategy, like ema to understand weather market is going up or down or is in sideways.
- You should plan trades rather than entry on the green or red candle.
- You should enter in trade when conditions met.
- Take either stop loss or your target after entering a trade.
- After taking trade, you have only two work, exit on stop loss and exit on target.
- Dont take trade after you have profit or loss. This is stage where you are hyperactive and need to calm down. (esp. for new traders)
- To sustain in the market, you need to patiencefully wait for the setup and make profits or recover lossess.
- Always follow a strategy which gives both profit and loss. It means not to choose the strategy that only gives lossess.
This will surely help in controlling your understanding of the market and recover your lossess from the market.