How do you keep your emotions in check during technical analysis and algorithmic trading?

1 Know your goals and risk tolerance

Before you start applying technical analysis and algorithmic trading, you need to have a clear idea of what you want to achieve and how much risk you are willing to take. This will help you set realistic expectations, avoid overconfidence or fear, and stick to your plan. You should also review your goals and risk tolerance periodically and adjust them if necessary, depending on your results and market conditions.

2 Follow your rules and systems

One of the main advantages of technical analysis and algorithmic trading is that they provide you with objective and consistent rules and systems to guide your decisions. However, this also means that you have to follow them faithfully and avoid deviating from them based on your emotions. For example, you should not ignore your stop-loss orders, chase losing trades, or exit profitable trades too early or too late. You should also test and backtest your rules and systems before using them live and monitor their performance regularly.

3 Manage your stress and emotions

Technical analysis and algorithmic trading can be stressful and emotionally draining, especially when the market is volatile or unpredictable. You may experience anxiety, frustration, anger, or euphoria, depending on how your trades are going. These emotions can cloud your judgment, impair your concentration, and lead to irrational behavior. To manage your stress and emotions, you should practice self-care, such as taking breaks, exercising, meditating, or seeking support. You should also keep a trading journal, where you can record your thoughts, feelings, and actions during your trading sessions and learn from them.

4 Evaluate your performance and results

Another way to keep your emotions in check during technical analysis and algorithmic trading is to evaluate your performance and results objectively and constructively. You should not focus only on your profits or losses, but also on your process and execution. You should analyze your strengths and weaknesses, identify your mistakes and successes, and look for areas of improvement. You should also celebrate your achievements, acknowledge your challenges, and reward yourself for your efforts.

5 Learn from others and seek feedback

Finally, you can benefit from learning from others and seeking feedback during technical analysis and algorithmic trading. You can read books, articles, blogs, or podcasts from experts and practitioners in the field, who can share their insights, tips, and experiences. You can also join online communities, forums, or groups, where you can interact with other traders and investors, exchange ideas, ask questions, or get advice. You can also find a mentor, coach, or partner, who can provide you with guidance, support, or accountability.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?