CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 87.41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Scan to Download iOS&Android APP

What is emotional trading?

Learn more about emotional trading
Share this article

Emotional trading is when a trader or investor lets personal feelings and emotions impact their decision-making. Sometimes it can be helpful, but usually bringing emotion into trading is a bad idea.

Where have you heard about emotional trading?

You might know this quote from famous trader Victor Sperandeo: "The key to trading success is emotional discipline". Most traders would agree that having control of your emotions is one of the most important traits in the investment world.

What you need to know about emotional trading.

The first thing a trader or investor needs to know is how to identify signs of it. Panic selling a share because it has lost a few points is one sign; hanging on to a falling stock because it "owes" the trader a return is another. Hiding from price updates because of a fear of loss is a third sign. Trading without a stop-loss is a fourth.

Emotional trading usually involves breaking away from strategy.

Removing emotion from trading is not easy. Emotional trading is similar to confirmation bias, a psychological tendency that impacts trading, sometimes without you even realising, and is an aspect of behavioural finance, the tendency to make irrational financial decisions.

Someone with an investment strategy should follow it, and never make an investment decision based on immediate emotion or 'gut-feeling'.

Related Terms

New to trading? Learn to trade with Capital.com

Latest Articles

View all articles

Still looking for a broker you can trust?

Join the 480.000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading