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What is Tilt and How to Fight It: 5 Practical Tips for Traders
What is Tilt and How to Fight It: 5 Practical Tips for Traders
Tilt is a term borrowed from poker by traders, meaning a loss of emotional control. Players on tilt begin to make aggressive and irrational bets to offset their losses, which ultimately increases their overall losses.
Trying to quickly recoup lost money is a surefire way to become insane. It is important to remember that losses are an inevitable part of trading, and after a series of losses, it is important to continue following your strategy rather than taking on more risk in an attempt to quickly recoup your losses.
To avoid tilt in trading, it is important to:
Creating and following a clear plan is the foundation of successful trading. The plan should include entry and exit strategies, profit targets, acceptable loss levels, and clear criteria for making decisions. Following a plan reduces the likelihood of impulsive behavior, which can lead to tilt. This usually happens when there is no plan and decisions are made in the moment.
Opening positions that are too large increases emotional stress. You should open positions in accordance with your capital and never take a risk that you cannot afford to lose. The more wisely you manage your risk, the less likely you are to be tipped.
If you are overcome by emotions such as fear, greed or panic, take a break. Get some fresh air, exercise or do something else that will take your mind off the trade. This will help you to reset your emotions and look at the situation objectively.
Write down every trade, including the reason for entering, the reason for exiting, and how you feel during the trade. Analyzing these records can help you identify emotional triggers that may lead to tilt and prevent it in the future.
If you feel pressured, talk to other traders. Talking to a colleague or mentor can help you gain perspective and provide helpful advice.
Following these guidelines will help you better control your emotions and avoid tilt, which will lead to more consistent and successful trading results.
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