How to
Manage
your
Emotions
Before the Trade
During the Trade
After the Trade
By Ravi Chandiramani
A Professional Trader & Trainer
“Every battle is won or lost before it’s ever fought”
– Sun Tzu
The Road to Success
In the very beginning, only Fundamental Analysis was used for trading.
Technical Analysis was used by only a handful of traders, who were
considered by the rest of the market community to be, at the very least,
crazy.
Fundamental analysis focuses on analyzing the financial performance of a
company, its industry, and the broader economy to determine its intrinsic
value. Fundamental analysis is a valuable tool for Traders and Investors who
are looking for Long-Term Investment.
Over the period of time, people shifted to Technical Analysis for trading as
it is based on visual representations of price movements, making it quick
and easy to analyze large amounts of data. It is useful for traders who need
to make quick decisions in rapidly changing markets.
Technical Analysis involves studying charts and using Price Action to identify
patterns and trends in market movements. Technical Analysts believe that
market trends, including price movements and proper chart reading can be
used to predict future market movements.
But now a days, Mindset plays an important role in Trading. In Trading, we
can say that it’s 10% Technical Analysis and 90% Mindset. A trader's
mindset is important in trading because it can significantly impact their
decision-making, risk management and overall trading performance.
A trader's mindset can impact their confidence in their trading abilities.
Confidence can be a positive factor in trading, as it can help traders stick to
their trading plan and make decisions without hesitation.
Mr. Ravi Chandiramani, Professional Trader and Trainer
Why Mindset plays an important role in Trading?
Being a trader is not just about formulating better strategies and
performing more extensive analysis, but is also about developing a winning
mindset.
What separates a Professional Trader (Winning Trader) from a Novice
Trader:
•
•
•
It’s NOT that winning traders formulate better trading strategies
It’s NOT that winning traders are smarter
It’s NOT that winning traders do better market analysis
What separates a Professional Trader from a Novice Trader is their
Psychological Mindset.
Below are a few reasons why mindset is crucial in trading:
Emotional control: Trading can be emotionally challenging, and traders
need to be able to manage their emotions effectively to avoid making
impulsive or irrational decisions. A trader's mindset can help them stay
disciplined, patient, and objective, even in stressful or uncertain market
conditions.
Risk management: Successful traders understand the importance of
managing risk and have a well-defined risk management strategy. A trader's
mindset can help them maintain a focus on risk management, including
setting stop losses, managing position sizes, and avoiding overtrading.
Confidence: A trader's mindset can impact their confidence in their trading
abilities. Confidence can be a positive factor in trading, as it can help traders
stick to their trading plan and make decisions without hesitation. However,
overconfidence can lead to taking on too much risk, which can be affect a
trader's performance.
Mr. Ravi Chandiramani, Professional Trader and Trainer
Adaptability: Markets can be unpredictable, and traders need to be able to
adapt to changing conditions. A trader's mindset can help them remain
flexible and adaptable, allowing them to adjust their trading strategy as
needed to stay competitive and profitable.
What Should be our Proper Mindset before Trading?
1. We should NOT have Mindset to Become Quick Rich. Instead, we should
have Mindset to Master the Skills of Trading:
Stock Market Trading is not some Quick Rich Scheme. Having a mindset to
become rich quickly can lead to a focus on short-term gains rather than
long-term success. This can result in adapting risky trading strategies and
poor decision-making, which may lead to significant financial losses. It is
natural to want to make money from trading but it is essential to prioritize
developing the Skills and Knowledge necessary for long-term success.
Having a mindset to master the skills of trading highlights the importance
of learning and developing expertise in the field, which is essential for longterm success. It can help traders remain focused on their goals and develop
a disciplined approach to trading. Rather than focusing on quick riches,
traders should focus on Mastering their Chart Reading Skills, continually
learning and adapting, and taking a disciplined approach to trading.
2. We should NOT have Mindset to Recover Losses. Instead, we should have
Mindset to Make it our Career:
Mindset to Recover losses can result in going for risky trading strategies,
poor decision-making, and further financial losses. Recovering losses can
be an emotional burden, leading to stress, anxiety, and even burnout. This
can make it challenging to maintain a clear and focused mindset, which is
essential for success in trading.
Mr. Ravi Chandiramani, Professional Trader and Trainer
Having a Mindset to make trading our career emphasizes the importance
of taking a long-term view of trading. Traders who see trading as a career
are likely to be more patient and methodical, taking the time to develop
their skills and strategies over time. It can help traders remain focused on
their goals, develop a disciplined approach to trading, and build a
sustainable career in the field. Once we have made career in trading, losses
are automatically going to recover. But recovering losses should not be our
focus.
3. We should NOT have Mindset to Earn from Day One. Instead, we should
have Mindset to Learn from Every Trade:
Having a mindset to earn from day one can lead to unrealistic expectations
and disappointment if earnings do not materialize immediately.
Having a mindset to learn from every trade can help a Trader grow as it
emphasizes the importance of continuous learning and improvement in
trading. Every trade offers an opportunity to learn something new,
whether it's about market dynamics, risk management, or trading
strategies.
4. We should NOT have Mindset to Identify some Shortcut. Instead, we
should have Mindset to Do what Needs to be Done:
Having a mindset to identify shortcuts can lead to a focus on quick fixes
rather than long-term solutions. Traders who are looking for shortcuts may
be more likely to take undefined risks or take trades without any proper
strategy that may undermine their success in the long run. The pursuit of
shortcuts can be distracting, leading traders to spend time and energy
searching for a shortcut rather than focusing on the work that needs to be
done.
Having a mindset to do what needs to be done is necessary as it underlines
the importance of Discipline, hard work, dedication, and perseverance in
Mr. Ravi Chandiramani, Professional Trader and Trainer
trading. Trading is a complex and challenging field that requires a
significant investment of time, effort, and resources to succeed.
5. We should NOT have Mindset to Start at Later Date. Instead, we should
have Mindset to Start Immediately After Learning:
Having a mindset to start at a later date can be problematic as it can lead
to procrastination, which can result in missed opportunities and a lack of
progress in achieving our goals. The start of our trading journey may cause
us to lose motivation or interest, which can make it challenging to get
started in the future.
Having a mindset to start immediately after learning highlights the
importance of taking action and implementing what we have learned.
Learning is essential, but it's only the first step. We need to put our
knowledge into practice to achieve real progress. Starting immediately can
help us build momentum and maintain motivation, which is essential for
long-term success in trading.
How to Manage Emotions
We never have to Control our Emotions but we have to manage them. As
a Human being, it’s quite impossible to control our emotions (especially
when money is involved) but it is essential to manage them effectively to
make rational and informed trading decisions. By managing our emotions,
traders can avoid impulsive decision-making, maintain focus and discipline,
and ultimately achieve success in the field.
Mr. Ravi Chandiramani, Professional Trader and Trainer
How to Manage Emotions Before Taking the Trade
1. Take Calculated Risk:
Our Risk per trade should be calculated and constant as per our capital and
the trade type. For example, our risk per trade in an Intraday trade should
not be more than 0.5% of the capital and our risk per trade in a Swing trade
should not be more than 0.75% of the capital. We have to take pre-decided
risk as per our capital no matter how good the opportunity is. Risk
management is important in trading because it helps Traders minimize
potential losses, maintain discipline, maximize potential gains, and achieve
long-term success.
2. Have your own Capital:
When you use your own capital in trading, you have greater independence
and control over your trading decisions. You are not beholden to external
investors or lenders, and you can make trading decisions based on your
own risk tolerance and investment goals.
You should never take loan or borrow money for Trading. When you have
borrowed funds at stake, you may feel pressure and take on more risk than
you would otherwise be comfortable with. This can lead to impulsive
decisions and a lack of discipline, which can ultimately result in losses.
Trading can be emotionally taxing even without the added pressure of
borrowed funds. When you have borrowed money at stake, the emotional
stress can be even more intense and can negatively impact your overall
well-being. When borrowed money is at stake, emotions can be so high
that if the trade is going in your favour, you may not wait till target and exit
at small amount and if the trade is going against you then you may find it
difficult to exit at stop-loss. It can have a negative impact on both risk
management and overall trading performance. Therefore, it is generally
Mr. Ravi Chandiramani, Professional Trader and Trainer
recommended to use your own capital when trading and to avoid
borrowing funds to finance trading.
In the Initial stage of trading, you start with the minimal amount which you
can afford to lose. Practice with that amount for the learning purpose. After
you have practiced enough and learned everything,
you can bring more capital for earning.
First, we should focus on Learning then we can think of Earning.
3. Risk Should not be Beyond your Risk Appetite:
Risk appetite refers to the level of risk that an individual is willing and able
to accept. When it comes to trading, it is important to ensure that the level
of risk taken on in any given trade is within your risk appetite.
If you take too much risk, beyond your risk appetite, it can lead to
significant losses and potentially capital drawdown. On the other hand, if
you take too little risk, you may miss out on potential profits.
To ensure that risk is within your risk appetite, you should carefully assess
you risk tolerance before entering into any trades. You should use proper
risk management money management to help control the amount of risk
taken and money invested on each trade.
By following this, emotions will not come into picture as you already know
your risk and you are willing to accept that if the things go adverse. You can
even start with the small amount as discussed in the above paragraph. In
such situations, your profits might not motivate you but at the same time
your risk will not scare you.
Mr. Ravi Chandiramani, Professional Trader and Trainer
4. Focus on the First 100 trades with 100% Discipline of Risk Management,
Money Management and Rules of a Strategy:
Focusing on First 100 trades with 100% Discipline of Risk Management,
Money Management and Rules of a Strategy is crucial to develop and
maintain the necessary skills and discipline to succeed in trading.
Practice makes a man Perfect. Your 100th trade is going to be better than
your 1st trade, your 1000th trade is going to be better than your 100th trade.
Start your practical trading with minimum amount which you can afford to
lose. Focus on first 100 trades with discipline, maintain a Trading Journal
and keep rectifying your mistakes.
By focusing on the first 100 trades with 100% discipline of Risk
Management, you can effectively manage your risks, such as setting stoploss at appropriate levels, managing position sizing, and avoiding
overtrading. And by focusing on the first 100 trades with 100% discipline of
Money management will help you allot funds to individual trades, which is
crucial for limiting losses and maximizing profits.
Following the rules of a trading strategy with 100% discipline will help you
with consistency and reducing emotional biases. A well-defined strategy
with clear entry and exit rules can help you make objective trading
decisions based on your analysis and avoid impulsive decisions driven by
emotions.
By focusing on the first 100 trades with strict discipline, you can gain
valuable experience and develop confidence in your trading abilities. This
can ultimately help you avoid common mistakes made in the past trades
and achieve better results.
Mr. Ravi Chandiramani, Professional Trader and Trainer
5. Never have dependency of Trading Income:
You should never have dependency on Trading Income until you become a
professional trader. This applies on your initial 3 to 6 months of your
profitable trading journey.
If you are dependent of your trading income to pay for your basic
requirements or to pay your bills and EMI’s then Emotions will play a major
role because of which you may take on more risk than you would otherwise
be comfortable with. This can again lead to impulsive decisions and a lack
of discipline, which can ultimately result in losses.
Your basic requirement should be fulfilled by your primary source of
income it can be your job or business. You should start trading along with
your job or business. Once you are making profits equivalent to double
their primary source consistently for at least 3 months then you can think
of leaving your job or rely completely on your Trading Income.
How to Manage Emotions During the Trade
1. Place Target Order and Stop-Loss Order and don’t keep tracking your
position:
After entering the trade, we don’t have to keep on monitoring the position.
We can simply place the Target order and Stop-Loss order and look for
another opportunity to trade in. By doing this we can keep the emotions in
check. For example, if the trade going in your favour then there can be Fear
of Loss of Profit in that and we can exit early from that trade. If the trade is
going against you then you may not exit from that loss-making position. It
can damage our Risk Management and Money Management. And it can
also help you if you are a Job going Professional or can’t track the positions
because of a busy schedule.
To place the Target and SL order together, you can simply use the Bracket
Order for Intraday and GTT (Good till Triggered) Order for a Swing trade.
Mr. Ravi Chandiramani, Professional Trader and Trainer
The profit target and stop-loss levels are used to automatically close out
the trade when either the profit target or stop-loss price is reached in such
type of Orders.
(For Bracket Order, you can use Angel One or Alice Blue Broker and for GTT
Order, you can use Zerodha Broker)
2. After Entering the Trade, never analyse the Trade (Wait for either Target
or Stop-Loss):
Once you enter the trade, you don’t have to analyse the trade again and
simply we have to wait for either Target or Stop-Loss. The idea of not
analysing a trade after entering it is based on having a well-defined trading
set-up and sticking to it. This is to avoid making impulsive decisions based
on short-term price movements. By doing so, you can remove the
emotional component from your trading decisions and focus on another
opportunities.
Even if you have entered in the wrong trade, you have to wait for either
target or stop-loss to hit. For example, after entering the long trade you
noticed some resistance point which was missed by you while analysing the
chart. Then also we have to exit the trade either at the target or at the stoploss. By doing this, you are sticking to the rules and maintaining discipline.
Write that trade in your trading journal and try to avoid same mistake in
another trade.
3. Never Exit anywhere in Between the Target and the Stop-Loss (unless you
have taken Intraday trade and it’s 3:15 pm):
Once you enter the trade, you don’t have to exit anywhere in between. You
strictly have to exit directly at either Target or Stop-Loss The reason behind
this approach is again to avoid making impulsive decisions based on shortterm price movements. If you exit a trade before the target or stop-loss
Mr. Ravi Chandiramani, Professional Trader and Trainer
level is hit, you may be cutting your profits short or taking on larger losses
than originally planned as per Risk Management. This can lead to
inconsistent trading results.
If you are an Intraday Trader, and at 3:15 pm neither the target nor the
stop loss is hit then you have to exit your position at the market price
whatever the profit or loss is going on in that trade. Otherwise broker will
automatically exit your position after 3:15 pm and may charge you for that.
You never have to carry forward your Intraday trade if the target or stoploss has not hit on the same day. But if you are a Swing Trader, you have to
wait for either the target or the stop-loss no matter for how long the trade
goes on.
How to Manage Emotions After the Trade
1. Take Rest for few days if you are continuously making Losses for few
days.
If you are making losses for few days or if you are swing trader and stoploss is hit in 5 consecutive trades then you must take rest from trading for
few days. The idea of taking a break from trading after experiencing a
series of losses to manage emotions and avoid emotional decisionmaking.
You don’t even have to track the market. Just take rest and start fresh
after 2-3 days.
In such situations, emotions will definitely come into the picture. Series
of losses can be frustrating and demoralizing. When such situation arises,
it is easy to make impulsive decisions, take bigger risks, or make trades
that go against your usual trading plan. This can lead to even greater
losses.
Mr. Ravi Chandiramani, Professional Trader and Trainer
Taking a break from trading for a few days can help to clear a trader's
mind and reduce the emotional strain. During this time, you can analyse
your trading journal to reflect on your trading strategies, assess what
went wrong, and develop a plan to improve their trading in the future.
2. Take Rest for at least a day if you are continuously making Profits for
few days.
If you are making Profits for few days or if you are swing trader and target
is achieved in 5 consecutive trades then you must take rest from trading
for at least a day. You don’t have to do that every time, you have to take
break if you start feeling overconfident. Taking a break from trading after
experiencing a series of profitable trades will help you to avoid feeling
overconfident and maintaining discipline.
Even if you find a best opportunity to trade in, you should avoid that.
Reason behind that is few people start thinking that they have
understood the market or they can time the market. We have to always
remember that market is bigger than us or any Institution. We always
have to respect the market and trade as per rules of our strategy.
In such situations, you may become overconfident and begin to deviate
from your usual trading plan. This can lead to taking on greater risks,
making impulsive decisions, or making trades that are not in line with your
overall trading strategy. You can also avoid the temptation to "ride the
wave" and continue trading even when market conditions may no longer
be favourable. This can help to prevent giving back profits.
We can be happy in such situations but we should never feel
overconfident.
Mr. Ravi Chandiramani, Professional Trader and Trainer