Emotional trading mostly occurs when a trade works against someone. In their mind they still see that the stock, index, commodity, etc. should be going up or down, so they jump even more into a trade.
When I see a trade coming to fruition I will generally research a trade for AT LEAST 4 hours before I set my trade PLAN. Without 4 hours of research I'm just guessing, and that's not how I play. After setting the original parameters of the trade, stop-loss and take profit levels, entry points (which I usually scale into positions) I then measure the risk/reward and see if it's even worth putting my capital at risk. I'm not going to lie, I love my money, so parting with it hurts.
Only after I've researched, initiated thought of the trade, identified the trade parameters, worked through the risk/reward ratio and consulted other related markets will I actually take a trade. Yes, it takes time, but it's my method.
There IS EMOTION in my trading. I do second guess myself, but I know my work and trading plan have identified my risk. I'm always nervous, anxious, excited, worried, etc about a trade, but when you set a plan you don't need to listen to those emotions. You just let your plan play out.
When I get stopped out of a position, it is just that; a stop out and I'm out. I usually don't move my stops from my original trading plan because capping that risk was the reason I took the trade. I have in the past and it generally didn't work well, multiplying my losses. When I do get stopped I take a look at the trade again. I review my prior analysis, look at the trade setup and plan. I then look at all the information I have at the current time after the stop was triggered. I use all of this information to formulate a new trading plan, or...
I move on. I take that stock off my radar and move on. There are so many markets to trade that I should be able to find a cleaner setup on something. If I can't, I'll save my cash for another day. Capital PRESERVATION should be the number 1 trading rule in anyone's book.
The point of the story is I do feel emotions while I have a trade on. Whether it be doubt, overconfidence, worry, excitement, etc. You can have emotions and trade, but trading with emotions is different. If you can't look back on a failed trade and not feel bad because you did the work setting up a good trade, you shouldn't be trading. Some of my best trades have been losers.
