Trading Without Emotions: Tips and Strategies for a Disciplined Approach

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by Gavin in Blog
March 28, 2023 0 comments
trading without emotions

Maybe you have heard that trading without emotions is essential to becoming a successful options trader.

Have you ever wondered why?

For those who have not heard this, let’s start you off with some quotes from experienced traders.



Mark Fenton, a 23-year veteran paramedic turned full time-trader, says:

“My paramedic career informs my ability to be a trader because you learn to take emotion out of things. That’s part of being a paramedic. It’s following a system and tuning out the literal noise and everything else that goes around that can affect your emotions and your thoughts. And it’s the same thing with trading. You’ve got to tune out fear and greed.” source: YouTube

He used two words that precisely explain what drives the market: “fear” and “greed.”

The well-known 26-year veteran day-trader Oliver Velez says:

“Everything needs to be rule-based. … They put the work in. They trade with a method. They trade with strategy. And they are not governed by their thoughts. They are not governed by their feelings. They are not governed by their beliefs because your thoughts are your number one enemy. Your thoughts in your trading betray you. Your feelings betray you. Your beliefs betray you. What doesn’t betray you is the freaking trading plan on the piece of paper because that trading plan doesn’t have a single thought. Doesn’t have a feeling. Doesn’t have any emotion. Doesn’t have a belief. And it never wavers. It’s the same every single time. If you don’t do your trades the same every single time, how are you going to be consistent? Because consistency comes from doing something consistently. You’re 100% robotic in the beginning.” source: YouTube


Oliver is using some strong words there.

He says our thoughts and feeling betray us.

Is this really true?

In the real world, it is NOT true.

But in trading, there is quite a bit of truth in that.

In the real world, where our ancestors have to face saber-tooth tigers in the wild, our thoughts and feelings are useful mechanisms for keeping us out of danger.

The fear response is advantageous, and our psychology has evolved to keep us out of danger.

Even in modern times, our fight-or-flight response will keep us out of bad neighborhoods or situations.

However, this psychological hard-wiring happens to be a hindrance in trading — either because the markets have evolved to take advantage of our natural hard-wiring, or it just happens to be.

Take a listen to this clip, “The Psychology Behind Great Trading Performance,” where three traders are talking about the instinctual lizard-brains, how humans are not hard-wired for successful trading, the fight-or-flight response, and the problem of taking profits too soon, etc.

Can Not Just Do What You Feel

This is why in trading, you can not do what you feel.

You have to do what is correct as per your trading plan.

Here are some common feelings that traders have.

Oh wow, look at that stock go. I better get in before I miss out.


This is the emotion of “greed” coming in. Traders call it FOMO (fear of missing out).

Oh, I don’t like the looks of today’s red candle. I better exit the trade.


This is the emotion of “fear” coming out.

Did your trading plan tell you to exit the trade?

If you had backtested your trading plan, which shows that it generates a positive expectancy, and then you don’t follow that plan, well, then you have just altered the statistics, and you can no longer expect to make the same return as it had predicted.

This is also the reason why your trading plan needs to be specific enough to leave no room for subjective interpretation.

Oh, I feel this stock is going to do well.


As Oliver says, it has to be rule-based.

You can not just pick stocks here and there out of thin air and then pick a direction based on “gut instinct” or from TV news.

What are the entry criteria based on your trading plan?

What specific pattern or signal from a system triggered that entry?

You need to trade from a system that has shown to have a statistical edge.

Oh boy, I got a profit in this trade. I’m going to take it. It will make up for some of the loss in yesterday’s trade.


What was your pre-determined profit target?

Your stop loss and profit target were specifically calculated based on win rate so that your wins can outpace your losses.

If you start taking profits prior to it reaching its profit target, you are altering the inputs into the trader’s equation, and it may be that your profits are unable to cover your losses.

The Cardinal Sin In Trading

“Our egos trick us into doubling up a losing position.”

This is a quote from the book “Zen in the Markets,” which says that the cardinal sin in trading is to double up on a losing position.

The author Edward Allen Toppel writes:

“There is something within each of us that has a power over our minds that prevents our acting according to what we have agreed is the proper course of action. That something is present in all of us and is very powerful, more powerful than anything I know. Let’s call it ego. Until we learn to get rid of our ego, we will never make money in the market consistently” source: “Zen in the Markets.”

At some point in the book, he says, too, “Tell the ego to take a hike!”

The first reason that the cardinal sin is committed is that our ego doesn’t want to be wrong.

It wants to be right.

To the ego, stopping the trade would mean being wrong.

Yet, stopping the trade is what we have to do.

We have to do what we have to do, not what we feel like doing.

The second reason this sin is committed is because of another emotion called hope.

By doubling down, we will get out profitable if the market reverse.

So now we hope that the market reverses, which may or may not happen.

Or it may happen too late.

Often the reversal will not come in the expected time.

The trader now fears that it may not happen at all and exits the position at double the loss than before.

And as if the market gods were watching, as soon as the gods saw that the trader had exited the position, the market reversed as expected.

The trader is left with a big loss, plus the emotion of regret.

The ego is an emotion, and we have been tricked by it.

This reminds us of Oliver’s words that our feelings betray us.

As humans, we all have feelings.

This is why statistics show that most new traders will lose money.

This is true; because new traders are trading on feelings.

They are trading like humans when they should be trading like robots.

Experienced traders are trading on a system.

The system need not be complicated.

At a minimum, the system needs to have a number to take profit and a number to stop loss.

But these numbers must have been tested to ensure that they produce profits.

At the end of this video, Oliver provides such a system for stock traders.

But before that, he explains why there is a 92% failure rate among traders.


Discipline is the practice of self-control to obey rules and code of conduct or behavior.

You may have also heard that to be a successful trader, you need to have discipline.

This, too, is true.

Again, Edwards Toppel writes:

“It takes a tremendous amount of personal discipline to do well trading. That goes for the floor traders and off-floor traders as well. Very few people can muster that kind of discipline on a nonstop, everyday basis.” source: Zen in the Markets


Are people born with discipline, or can discipline be learned?

This is how Dr. David Paul humorously explains it in his talk “The Psychology of Trading and Investing.”

“Of course, it can. Why is an old man like me in the gym this morning at half past six? Twice a day. Did it take any discipline to get me to the gym this morning?”

We all know that answer. He paused for effect and said,

“None whatsoever. The paradox is that if you got it, you don’t need it.”

How do we build discipline?

David Paul says in his presentation,

“To build discipline, you are going to have to grit your teeth.”

Just like other facets of life, you need the discipline to stick to an exercise regimen, even if you don’t feel like it.

You need discipline to eat healthily, even though you really want to just eat junk food.

The same is in trading.

You need the discipline to follow your rules and not be swayed by your emotions.


Experience trader knows that this game is partly psychological.

Once you have a system that gives you a statistical edge, you need the discipline to follow that system and not be betrayed by your emotions.

Put aside our egos.

We need to be humble — to know that we are often wrong and to be flexible to change.

The market is the master.

Listen to the master; it is always right.

We hope you enjoyed this article on trading without emotions.

If you have any questions, please send an email or leave a comment below.

Trade safe!

Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.


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