Article Mastering Your Emotions and Mind When Risking Capital

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Dec 19, 2004
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Risking capital under pressure can be like a time bomb ticking away in your head.  One moment everything is under control and then (in the blink of an eye) the thought or threat of losing capital pulses through you – creating an emotional avalanche that covers up rational thinking.  It may be at an entry point, where you have to come to grips with the possibility that you could lose money – and a shudder runs through you.  It could be when your position goes against you and you feel the money slipping through your fingers – and an urgency consumes you to get it back before it’s too late.  Or it could be after your position has turned profitable and waves of anxiety pulse through you – and you regretfully get out way too early with a skinny profit.  Or even worse, after a string of victories, you give it all back in a flush of over-confidence.
In theory, decision making in trading or actively managing positions looks so simple.  Logically you know what to do and how to do it.  It’s...
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