How to Trade more Mechanically | Trading Mentality

Many people underestimate the importance of a good trading mentality. There is hardly any job with so many ups and downs as in trading. In trading almost everything is possible in a short period of time: you can make and lose a lot of money over and over again. This requires some getting used to. Having a good and confident trading mentality is therefore just as important as education. Many traders have hard times sleeping and making decisions because of the constant fear of losing money. In this post I will try to tutor you so you can develop your own trading mentality just like the pros.


Emotions while Trading

Emotions and trading in the stock market don’t go together! It is never a good idea to become emotionally invested into your trading activity. Of course, you should still be able to enjoy your time trading and making money. But for most people the trading losses are felt more than the gains. This can lead to bad habits and emotions influencing some trading decisions. While trading, you should always try to stay as rational as possible and not let emotions influence you in any way. I know that this is much easier said than done. But with a few simple tricks things can get much easier.

How to keep Emotions out of Trading | Trade emotionless

While risking hard-earned money people naturally act different and emotional. To make smarter and more profitable decisions it is important to develop some good trading habits/routines to keep emotions out and start to trade like a robot. (This may sound weird at first but believe me it is for your own best). Here are some simple but extremely useful tips:


1. Setting goals before the entry. A key factor to rational decision-making is to predetermine all your important factors: adjustment points, maximal draw down, exit level and exit plan. Write these points down before every entry into any position. Before the entry you will be able to think and handle rationally because you aren’t risking anything yet. Therefore, you will easily work out good and logical goals, when to adjust and exit. This will eliminate any decision-making points while in a position.


2. Now it’s all about sticking to your trading plan. The best way to do this is by setting alerts/reminders. You should then get used to executing your plan as soon as possible after you get your alert. Nowadays most broker platforms even have implemented alerts/reminders with many different settings.

Often they will just send you a quick mail or other message as soon as the requirements of the alert get fulfilled. This relieve’s you from constantly having to check your positions and gives you time to do and think about other things. The important step with these alerts is developing the habit to execute your plan mechanically after you get any form of message.


3. To take it even further many broker platforms have options to set special kinds of orders which can be executed if certain criteria gets fulfilled. This is very powerful. You can enter your whole trade plan for a certain position from start to finish before your entry. These orders will then automatically close/adjust your positions if your alert requirements get hit. This doesn’t only take emotions out of the game but rather the whole person. This can automate some of your trades completely. You wouldn’t even be required to check your position once. With this method there would be absolutely no possibility for your emotions to mess up anything.

4. The last tip for this article isn’t only important for keeping emotions out. This tip is key for being profitable! The tip is KEEP POSITION SIZES SMALL. It can not be said often enough. Don’t risk more than you are able to lose. No one would be able to sleep if they would risk 40% of their account every other day. If you keep your position sizes small it wouldn’t even matter too much if you lose on one or even more trades. This is extremely important to being profitable! (More to position sizing later)


I really hope that you could learn something from this post and could get some helpful tips to help you keep emotions out of your trades.

9 Replies to “How to Trade more Mechanically | Trading Mentality”

  1. Hi thanks for the wonderful information that you have provided in the article really found it interesting to read.

  2. I won’t lie, I’m not any kind of trader. You never know though, maybe someday. Right now I actually invest through a company called Betterment. However, I still have to be patient as I see my funds go up and down. I leave the decisions to the company though as far as the investment decisions go. One thing I do have control over is if I want my funds to be used aggressively or passively. Currently I have it split down the middle. I don’t have too much invested right now, but I put a little bit in every paycheck. I think investing while you are young is an important aspect if you want to enjoy retirement. While I’m not a trader, I appreciate your article as I learned some new things. Thanks!

    1. Hey Jeremy,
      I 100% agree with you. The younger you are the better it is to invest. But it is never too late to begin. But I would recommend you to try out some investing yourself. If you educate yourself you can easily beat companies like Betterment.

  3. Very handy tips Louis, for a newbie like me, who has just started trading on binary options today (!!!). At the moment I am only practising on a demo account, but you see, your advice definitely proves most valuable if you think that when I started earlier today and was bidding on companies’ shares, I came out in profit. But then I wanted to chance my luck tonight by bidding on the Forex exchange, and I am doing disastrously. May this serve many, and me, as a lesson to stop when you are on top of the game.

  4. Hey, Louis!

    Very nice and informative article you made! I really enjoyed reading this – tons of useful information with beautiful illustrations to go with. Again, great job!

  5. I agree that exit levels are so important to set. I wish I had read this article sooner! Thanks for your information that I will use the next time I trade.

Leave a Reply

Your email address will not be published. Required fields are marked *