How emotions affect your judgement

Now, you may be thinking your emotions do not affect your judgement you use in driving from point A to B. Same way that your emotions will not affect your judgement that the current rally has reached a pause.

Very true.

So I have been talking about emotions affecting your trading, and you may not quite understand. So if you do not really understand, you will probably still risk 10% of your capital on that trade or investment.

Rather emotions will affect whether you tailgate that dastardly road hog. Or emotions may affect you to weave past 4 lanes of highway road. And no problem, you have done it before. You can do it again .. and again .. and again til... one fine day. You get my drift?

Same with how emotions will affect your trading decision to double up on your losing positions or not to cut your loss short. Exuberance will make you stake 100% of your capital on one trade. Fear will make you hesitate on that signal and miss out on a winning trade. Still the emotion of getting back at the market will cause you to do revenge trading and entering into unnecessary trades.

When does emotions become an issue? When you are trading too big for your shoes. Same way that young drivers should not drive Ferraris (generally).