Emotions shape decisions
When money is involved, emotions such as fear, hope and regret directly affect decisions. Holding a losing position in the hope that it will come back, or closing a winning position earlier than planned, are common examples. These reactions are human; the aim is not to eliminate them but to notice them.
After a loss
After a loss, there can be an urge to open unplanned and larger trades to win the money back quickly. This behaviour can make the loss bigger. Taking a break after a bad trade helps separate the decision from the emotion.
Overtrading
The urge to always be in the market can lead to trades that do not fit the plan and rest on weak reasons. Every trade also brings the spread and other costs with it. The number of trades is not, on its own, a measure of success.
Plan and journal
A trading plan sets out in advance which products to trade, under what conditions and with how much risk. A trading journal records the reason for each trade, its result and your state of mind at the time. Reading the journal regularly reveals repeated mistakes in behaviour before they show up in the numbers.
Keeping expectations realistic
Stories that promise big results in a short time can lead people to overlook risk. Learning takes time and includes losing periods. Judging results by how closely the plan was followed, rather than trade by trade, gives a more balanced view.
Discipline and a plan can help you manage risk, but they do not prevent losses. Trading leveraged products carries a high level of risk, and you can lose all of the money you deposit.
Read the risk disclosure