How I TRY TO manage my emotions for trading using VISA as an example

The biggest struggle I have when I trade is my emotions. There would be constant temptations coming from the fear of missing out (FOMO).

Note that there is a difference between trading and investing. Investing.com has a great explanation of the difference:
  • Investing takes a long-term approach to the markets and often applies to such purposes as retirement accounts.
  • Trading involves short-term strategies to maximize returns daily, monthly, or quarterly.
  • Investors are more likely to ride out short-term losses, while traders will attempt to make transactions that can help them profit quickly from fluctuating markets.

With the above definitions, I would like to share how I (try to) manage my emotions coming to my trade (not investment).

When I was a younger trader, I rely largely on technical to trade. Being aware of my weakness, I started to develop a process for me to better manage my emotions.

My Trading setup

My trade setup will be using 2 charts- 1 Day chart as the anchor chart and 1 Hour chart as the entry chart. The anchor chart is where we look for the trend or reversal of the current trend. Honestly, the longer the time frame, the better is the accuracy of our charts - with lesser false signals and noises.

Set up with VISA $V as an example:

I would first go to my excel spreadsheet and enter the info about 1D (stochastic and MACD trend) followed by that for 1H. This is key as I would see in front of me whether my trade set-up is in the proper position. This helped me greatly and I could (sometimes) back off after entering the info, making effort for logic to step in instead of emotions.

Technical analysis using 1 D & 1 H charts

After this, I will then alternate between the 1 Day (1D) chart and 1 Hour (1H) chart to execute my trade (if the set-up is in my favour - where both Stochastic and MACD for 1 D chart has bottomed up).

1 Day Chart (Anchor)

From the 1 Day chart above, if I am more aggressive, I will use the cross-over at the Stochastic as a signal to buy. However, my experience has shown that the MACD chart works better as it is prudent - with fewer false signals but it is slower to react compared to Stochastic. For this example, I "choose" to use a stochastic chart as my reference for the buy signal over MACD. With this, I will then drill into the 1 Hour chart to ascertain my entry point.

1 Hour Chart (Entry)

From the 1 Hour chart above, we see both Stochastic and MACD at the top with cross-over (usually a "sell" signal). Understand it is possible for MACD/Stochastic charts to "range along the top" over extended periods of time - a persistent climb. Ideally, I would wait for the stochastic to bottom-up and form a cross-over starting an upward climb. This would be my signal to entry. However, it is important that the bottoming of the 1 Hour chart is not a lower price as compared to the most recent low (of $187 range). If the price drops lower than the previous low ($187 range), a downward trend may continue. In this case, the trade is abandoned.

For shorter time frame trades, I may set up using a 1 Hour chart as the anchor chart and a 5 or 10 minutes chart for entry. For longer trades, I may set up using a 1-week chart as the anchor chart and 1 Day chart for entry.

The effort to enter our assessment of the indicators can help us to avoid entering a trade, based on emotions and force us to rationalize the trade. Over time, I still make emotional trades but at a much lesser frequency.

Hopefully, this can help us to trade better.  I am also looking more into long term investments over trading.

Personal preferences for set up

Personally, I choose the "slow stochastic" for setup over the regular stochastic. Should I feel "aggressive", I would use the stochastic indicator for my trade signal but MACD is the better and more prudent one thus far. I have "avoided" a few heartaches because I chose to follow MACD. In these cases, I managed to enter at better prices following the double bottoms pattern.

Such a setup cannot be used for stocks with strong rallies where prices keep going up for hours.

@TigerStars 

# Technical Analysis

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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  • Cliff
    ·2022-03-10
    Great tools for me to use. Most of the time, I do meditation and excersice to control my emotionls, and meditation does help😉
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    • Tamashii
      okie
      2022-03-13
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    • Vic_yk
      💪
      2022-03-13
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    • Stephen15
      Great recommendation
      2022-03-13
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  • MortimerDodd
    ·2022-03-10
    I agree with you that investing and trading are very different.
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    • Chiweii
      🙌
      2022-03-17
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    • SysyReplying toAutumnbees
      ok
      2022-03-13
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    • MortimerDoddReplying toAutumnbees
      So the ability to control emotions is very important for traders.
      2022-03-13
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  • MR_Wu
    ·2022-03-10
    For the average investor, holding for the long term is a better option because we don't have that much expertise.
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    • sunflower19Replying toMR_Wu
      agree too! [Like]
      2022-03-11
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    • MR_WuReplying toKYHBKO
      Any company with value will eventually rise.
      2022-03-10
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    • KYHBKO
      great advice. long term is the way to go
      2022-03-10
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  • Moshimaru
    ·2022-03-11
    thanks for the insight. My take is very few stocks can be qualify as worthy for long term value investing nowadays, key us to do the right pick in the long and leverage on volatility in the short
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    • KYHBKO
      you are right. one of my favorite gurus Mr Charlie Munger only added one stock recently after 6 years of not purchase.
      2022-03-11
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  • BurnellStella
    ·2022-03-10
    Thanks for your sharing, I learned a lot about the usage of technical indicators.
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    • Nasbhai
      Yeah
      2022-03-13
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    • sunflower19Replying toKYHBKO
      yes another trading knowledge gain! 👏  nice...keep learning and thanks for sharing 👍
      2022-03-11
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    • KYHBKO
      glad to help. all the best
      2022-03-10
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  • marcothen
    ·2022-03-11
    Fomo is good term
    This technical short term “gambling” is good tool
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  • BellaFaraday
    ·2022-03-10
    An effective way to increase your yield is to execute your trades through indicators rather than sentiment.
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    • Ignis
      ok
      2022-03-13
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    • wenjinReplying toKYHBKO
      Yes
      2022-03-13
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    • KYHBKO
      yes.
      2022-03-10
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  • LouisLowell
    ·2022-03-10
    Yes, one's emotions can significantly affect investment returns.
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    • NewbieEP
      Yes, need to decide when to buy and sell quickly before missing out
      2022-03-13
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  • RoaringTiger
    ·2022-03-11
    Thank you for showing how you taper off emotions by establishing guidelines and using data to guide decisions [Victory] learn much from you
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    • bucketheadReplying toKYHBKO
      ok
      2022-03-13
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    • KYHBKO
      thanks for your kind words. all the best to you too. hope that this can help us all to be better investors
      2022-03-11
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  • drandy
    ·2022-03-13
    thanks for sharing your insights! [Like] one other important rule for me is "Don't trade with money that you don't have or cannot afford to lose." cos if u do, it will add to emotional instability.
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    • KYHBKO
      good advice. all the best.
      2022-03-13
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  • wingcheong
    ·2022-03-13
    Investing in good stocks like Visa will be a wise move. Unlike trading, investing takes a longer term approach and meantime enjoy good dividends.
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    • KYHBKO
      I am trying to pivot most of cash into investing, trying to leave 10 to 15% for trading
      2022-03-13
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  • Nase
    ·2022-03-12
    For days I plan for entries but my issue is when the stock starts to decline i rush to enter and when it is trending i rush to exit even though it does not meet my criteria and I suffer on red days
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    • KYHBKOReplying toNase
      we will get better with experience
      2022-03-13
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    • Nase
      Thx
      2022-03-12
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    • KYHBKO
      this happens to most of us. unfortunately, the macro news of Ukraine will affect the price more than our technical analysis with market swinging to the dominant news. as such observing is better.
      2022-03-12
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  • ElvisMarner
    ·2022-03-10
    The most effective trading strategy must be a combination of stock fundamentals and technicals at the same time.
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    • KYHBKO
      yes I agree.
      2022-03-10
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  • LuckyPiggie
    ·2022-03-13
    Thx for sharing great for newbie like me. Learned new thg,stochastic [Grin]. One  drawbacks on mobile app is addon indicator is really small and only avail in expanded mode. Hard to do quick checks.
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    • KYHBKO
      all the best. let us learn and improve along the way.
      2022-03-13
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  • 苗派
    ·2022-03-13
    Thanks for sharing 👍 Good read. Being human has emotion is normal, when into trading u train to be emotionless & logical which can be inhuman in some cases 😂
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    • 苗派
      👍 Well said, Agree.
      2022-03-14
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    • KYHBKO
      there is a right time for everything.
      2022-03-13
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  • SG 88
    ·2022-03-11
    I feel what you've said. It's hard to convince oneself when the market sea of red, especially your already on the market. Strong fundamental with long term view beats every market volatility [smile]
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    • SG 88Replying toKYHBKO
      nicely put
      2022-03-11
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    • KYHBKO
      the fundamental analysis will be key to give us confidence. let us do our due diligence before we invest.
      2022-03-11
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  • EvanHolt
    ·2022-03-10
    The K-line reflects past indicators, and I don't think these indicators are necessarily effective in predicting the future.
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    • KYHBKO
      valid point
      2022-03-10
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  • Sonoma
    ·2022-03-13
    Thank you for sharing your trading strategy with us ! Very useful [Smile][Claw]
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    • KYHBKO
      glad to help a fellow tiger
      2022-03-13
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  • bernardtayet
    ·2022-03-13
    Nice to hear from you on your experience in trading.
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    • KYHBKO
      hope that this is helpful
      2022-03-13
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  • ZEROHERO
    ·2022-03-11
    Thanks for sharing! Useful to check overall mkt sentiment with SPY & VIX to trade large cap US stocks. Support & resistance in hourly & daily chart helps with MACD, RSI & WilliamsPercentR as ref 😉
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    • ZEROHERO
      Constantly struggling with greed & fear 😅
      2022-03-11
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    • KYHBKO
      it looks like you have a great trading setup. wishing you great success.
      2022-03-11
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    • KYHBKOReplying toZEROHERO
      it's a challenge for most of us
      2022-03-11
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