Our emotions are part of our human behavior and it has a profound impact on our trading decisions. In the context of trading, the two primary emotions that affect our decision-making are "FEAR and GREED" Fear is a powerful emotion that will push us to think twice about entering and exiting the trade. Sometimes because of our fear of the trade, we exit immediately even though we know that it is too early to do so. And when fear dominates we become overly cautious, which also causes us to miss the opportunity for profitable trade even though we have seen the high probability set-up we should enter a trade but we don't because of fear.
It's the same when we enter a trade, we immediately exit because our immediate thought is that we might still lose. This is also due to fear, Now if we are Greedy it also has an effect on our decision-making. Because this will push us to take excessive risk because we want a higher return. So, because of greed, we will increase the leverage that the position size is too big, the type that can only gain a lot, we will trade 100% capital in just one trade. It will also cause impulsive action, and we will also be tempted into speculative trades without proper risk management.
Keeping emotions away from trading is easier said than done. We can't separate emotions from trading. There will always be emotions, we just should not allow those emotions make decisions for us.
But I have a question, if I exit trade then that's "fear" and if I keep trading is "greed", so what am I supposed to do. Fear and greed are not what we should allow make decisions for us, sometimes the decision might come out good but it doesn't always work out. So what am I to do?