Home > management, Markets, Planning, trading > Profitable ETF Trading Strategies: managing your emotional bank account

Profitable ETF Trading Strategies: managing your emotional bank account


Managing your intraday trades when the market is open can be a very nerve-racking experience. Sometimes there’s so much going on that it’s hard to keep track of what’s important. Other times it seems like you’re watching paint dry and nothing is going on in, and you can feel your nervous energy building up in an urge to do something. 

This sense of market condition affects your trading state of mind, as does the sum total of your emotional responses to the results of the trades that you have taken so far that day. 

It is as if you have an emotional bank account that tracks the debit and credit of emotional responses to the results of the day. After a couple of losing trades in a row, it would be natural for you to start experiencing a little bit of anxiety with respect to the remaining positions at the open in order to gain back some of that positive feeling of momentum and profits. 

If you can feel your emotional state varying as a consequence of the trade results for that day, then it is a good idea for you to reinforce your trading practice which gets you to the “zero state” quickly and easily as soon as you can sense your emotional state changing. 

If you are an intraday trader who is relying upon tight stops catching key turning points in the market to create high reward to risk ratio trades, however, you must come to expect a series of losing trades in a row with minor losses in order to be positioned to catch the winning trade which buys them all back and then some when your trade takes off. 

If you have unreasonable expectations about your winning rate, you may find yourself becoming depressed by a losing streak that should be considered normal, usual and expected. Knowing your system and the way it performs will help you resist the emotional drain of losing trades that are within a normal distribution. 

In addition, trading techniques like getting to “no lose” condition quickly, staying in tune with market cycles intraday,  and being ruthless about banking some wins when you have them in hand can help you develop the emotional thick skin to be able to manage trades that go against you in a professional manner. 

If you find yourself reaching for the next trade, or getting nervous about looking for the next opportunity to get you back to your winning ways, then you have an indication that you are not trading from emotionally balanced, stable and secure base. 

The more your trading relies upon your discretion and judgment in the moment, which is a common feature of intraday trading, the more important it is for you to monitor your intraday emotions. 

It’s a good idea to include your emotional state in the evaluation checklist you use on each  trade, so that you can make sure that you’re coming from a place of emotional, psychological and intellectual try and you enter a new trade rather than as a response to a decaying emotional state. 

Monitor that emotional bank account traders!

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