Emotional Trading: What It Is, the Six Emotions That Drive It, and How to Control Them

Emotional trading is making a trading decision because of how you feel rather than because of what your plan says. Six emotions do most of the damage: fear, greed, hope, regret, boredom and euphoria. Each produces a recognisable behaviour and a pattern in the trade log, and each is neutralised by one specific rule, the only reliable form of control.

Every trader knows the advice to keep emotions out of trading, and every trader knows it does not work, because the emotions arrive whether they are invited or not. A loss produces a physical response before the trader has finished reading the number. A winning run produces a different one. Research on professional traders has measured both, and found that even experienced people show them. As a prop trading firm, we see the results in evaluation data: the accounts that fail rarely fail on strategy. They fail on a sequence of decisions that each made emotional sense at the time.

This page is the parent for the emotions layer of trading psychology. It explains what emotional trading is, names the six emotions that matter, shows what each one makes a trader do and what it looks like in a trade log, explains how the funded-account setting changes the stakes, and sets out the rules that make each emotion irrelevant to the outcome. The behaviours the emotions produce, revenge trading, overtrading and FOMO, each have their own page; this one explains what drives them. It sits inside the frame our guide to the funded trader mindset describes.

What Is Emotional Trading?

Emotional trading is any trading decision driven by the trader's feeling in the moment rather than by a pre-set rule: entering because a move is exciting, exiting because a drawdown is uncomfortable, sizing up because a loss stings, holding because closing would confirm a mistake. The problem is the decision the emotion is allowed to make, never the emotion.

The definition matters because the popular version, "trading with emotion," describes something that cannot be avoided. Feeling fear during a drawdown is being a human being with money at risk, and nothing more. Closing the position because of the fear, when the plan said to hold, is emotional trading. The line runs between the feeling and the decision.

That line is also where the fix lives. No rule can stop a trader feeling greedy after four wins. A rule can stop the greed from touching the position size, by fixing the size in advance. The whole of this page follows from that: emotions are given, decisions are designed, and the design is what separates the trader who feels fear from the trader who acts on it.

There is a physical basis for this. Lo and Repin (2002) measured the physiological responses of professional traders during live trading and found significant reactions, in heart rate, skin conductance and other markers, to market events, in experienced traders as well as new ones. A follow-up by Lo, Repin and Steenbarger (2005) found that traders with stronger emotional reactions to gains and losses tended to perform worse. The emotions are real and measurable. The performance difference comes from what the trader does with them.

What Are the Six Emotions in Trading?

Six emotions account for most emotional trading decisions: fear, greed, hope, regret, boredom and euphoria. Fear and greed are the famous pair; hope keeps losers open, regret prompts chasing, boredom manufactures trades on quiet days, and euphoria after a winning run loosens every rule at once. Anger, the seventh, produces revenge trading and has its own page.

Trading folklore reduces the list to fear and greed. That is too short to be useful, because it misses the emotions that do the quiet damage. The six below are the ones that show up repeatedly in trade logs and in the behavioural research, and each is treated in turn in the next section.

The table is the page in one view. The right-hand column is why this page exists: each emotion is the engine behind a behaviour that has its own guide, and the behaviour cannot be fixed without recognising the emotion underneath it.

How Does Each Emotion Affect Trading?

Fear shrinks trades and skips setups; greed stretches targets and size; hope keeps losing trades open; regret produces chases and re-entries; boredom fills quiet sessions with trades that were never planned; euphoria, the most dangerous, arrives after success and switches the rules off when the account is largest. Each has a signature in the log and answers to one rule.

Fear. Mark Douglas named four fears of trading: being wrong, losing money, missing out, and leaving money on the table. In practice fear shows up as a trader who cuts winners at half the target because the profit might disappear, who watches a valid setup form and does not click, or who trades at a size so small that even a perfect month cannot move the account. In the log, fear is an average win far smaller than the strategy's design allowed, and a list of setups noted but not taken. The fix is mechanical: the target is placed with the order and not touched, and the size is fixed by the plan, so the fearful trader has nothing to decide in the moment. Fear of missing out is its own species and is covered on the FOMO page.

Greed. Greed is fear's mirror: instead of taking too little, the trader wants more than the plan allows. The target is moved further away as price approaches it. The size is raised because the last three trades won. A second position is added to a winner that is already extended. In the log, greed is targets that drifted, size that rose with the equity curve, and gains that were larger on paper than at the close. The fix is the same as for fear, applied to the other side: a target that is never moved further away, and a size that does not change because of recent results.

Hope. Hope is the emotion that keeps losing trades open. The stop is approaching, closing would make the loss real, and the trader "gives it room" by moving the stop, or simply does not act. Hope is why losses in a trade log come in at one and a half or two units of risk when the plan said one. It is the affective side of the disposition effect, the tendency to hold losers and sell winners, and it is fixed by one rule that admits no exceptions: the stop is placed with the order and is never widened. Our guide to how to reduce drawdown covers what an unwidened stop protects.

Regret. Regret arrives after the fact and prompts the next decision. A move was missed, so the trader chases it. A position was closed at the stop and then reversed, so the trader re-enters without a setup. In the log, regret is late entries after large candles and instruments re-entered within minutes of a loss. It is the engine behind both FOMO and revenge trading, which is why those two behaviours so often appear together. The fix is a rule about the past: a closed trade is closed, a missed trade is missed, and the next entry has to qualify on its own terms.

Boredom. Boredom is the emotion nobody warns traders about and one of the most expensive. A quiet session offers nothing that meets the plan, and the trader, at the screen with nothing to do, lowers the standard until something qualifies. In the log, boredom is trades on low-volatility days, on instruments that were not on the watchlist, with thin or missing reasons in the journal. It is the main driver of overtrading in traders who are not otherwise emotional. The fix is a fixed watchlist, a setup-quality gate and, frankly, permission to close the platform on a day that offers nothing.

Euphoria. Euphoria is the most dangerous of the six because it arrives after success, when the account is at its largest and the trader's confidence is highest. After a winning week the rules feel like training wheels. Size goes up, frequency goes up, the journal is skipped because the results speak for themselves. In the log, euphoria is deviations that cluster on the best weeks, and a drawdown that begins from an equity peak. It is the affective state that overconfidence bias operates through, and it is fixed by a rule most traders resist: a daily and weekly profit stop, and a size that is recalculated from the plan each morning rather than from how the week feels.

The pattern across all six is the same. The emotion is normal, it produces a specific decision, the decision leaves a specific trace, and a specific rule removes the decision from the trader's hands. That is what control means in trading: the absence of a decision for the feeling to make.

How Do Emotions Change on a Funded Account?

On a funded account the emotions are the same and the stakes are higher. A fixed maximum loss makes every drawdown a countdown, sharpening fear and hope; a target and payout make greed and euphoria tempting. Pipcy removes three pressures other firms build in, a daily limit, a time limit and a high minimum-days rule, leaving discipline to the trader.

A personal account has a balance. A funded account has a balance, a maximum loss, a profit target and a payout schedule, and each of those is something an emotion can attach to.

Fear and hope sharpen against the loss limit. A 12% static maximum loss is generous by the industry's standards, but it is a number, and a trader in drawdown watches the distance to it. That makes fear more likely to cut winners early (protect what is left) and hope more likely to widen a stop (do not spend the budget on this one). Both are the same emotions as on a personal account, with a deadline attached. The fix is the same as well: the stop and target are placed with the order, and the trader's job is to not touch them. Our guide to daily vs maximum drawdown explains why the static maximum, without a daily limit, gives a trader room to be wrong without being closed out.

Greed and euphoria sharpen against the target. A profit target is a finish line, and a trader who is close to it feels the pull to size up and finish. A trader who has just passed and is approaching a first payout feels the same pull in the other direction, to protect the payout by trading tiny or not at all. Both are emotional decisions about the plan, prompted by the account's structure.

Three pressures Pipcy does not create. A daily loss limit turns one volatile session into a source of fear all day. A time limit turns every setup in the final week into a scarcity event. A high minimum-trading-days rule makes traders manufacture activity to fill the calendar, which is boredom with a deadline. Pipcy has no daily drawdown, no time limit, and a 3-day minimum on every route, so none of these pressures exists here. That is a structural help for emotional control and it is worth knowing about. It is no substitute for the rules, because fear, greed, hope, regret, boredom and euphoria travel with the trader whatever the firm's rulebook says.

One thing the funded setting adds. On a personal account, a bad emotional day costs money. On a funded account it can also cost the evaluation, and the emotion that follows that is a seventh kind, best handled by a rule decided in advance: what you will do in the week after a failed evaluation, before it has happened. In forex especially, where most of Pipcy's accounts trade and where session opens and news releases produce the sharpest emotional spikes, the plan for the bad day matters as much as the plan for the good one.

How Do You Control Emotions in Trading?

You do not control emotions in trading by feeling less. You control them by designing decisions so the feeling has nothing to act on: fixed size, stop and target placed with the order and never moved, a written watchlist and entry criteria, daily loss and profit stops, a recovery window after losses, and a journal that records the emotion.

Every rule below removes one decision from the moment and gives it to the plan. The emotions still arrive. They arrive to find nothing to do.

1. Fix the size before the session. Position size is calculated from the plan's risk percentage and the stop distance, every morning, and does not change because of how the week is going. This single rule neutralises greed and euphoria on the upside and fear on the downside, because size is where all three try to act.

2. Place the stop and target with the order, and never move them against yourself. The stop is never widened; the target is never moved further away. Moving either one is hope or greed making a decision. Moving the stop to breakeven, or the target closer, is allowed if the plan says so, because those moves reduce risk rather than extend it.

3. Write the watchlist and the entry criteria the night before. Boredom and regret both work by lowering the standard for what counts as a trade. A written list of instruments and a written list of conditions, both decided when no market is open, cannot be lowered in the moment.

4. Set a daily loss stop and a daily profit stop. The loss stop is the brake on fear-driven and anger-driven trading; the profit stop is the brake on euphoria. On Pipcy the loss stop is the only daily stop there is, since the firm does not impose one, so it is the most important line in the plan.

5. Use a recovery window after every loss. Fifteen minutes away from the screen, timer on. Regret and anger both decay with time, and the window gives them time. The full method is on our revenge trading page.

6. Journal the emotion alongside the trade. One word per trade: calm, anxious, bored, euphoric, frustrated. Over a month the journal shows which emotion precedes which deviation, and that is the trader's personal version of the table above. Most traders discover that one or two emotions do almost all their damage, which narrows the problem to one or two rules.

7. Grade the day on adherence. The scorecard is whether the rules were followed, whatever the profit. A losing day on which every rule held is a good day. A winning day with three deviations is a bad one, because the deviations will be repeated and the luck will not. This reframing lowers the emotional charge of individual outcomes more than any other habit, and it is the practical form of the "thinking like a trader" reframing that Sokol-Hessner and colleagues (2009) found measurably reduces loss aversion.

All of this is the trading plan. The full document, with a worked example for a funded account, is on our trading plan page; this section is the part of it that exists to handle emotion.

Can You Trade Without Emotions?

No, and the attempt is itself a source of emotional trading. Traders who believe they should feel nothing treat every feeling as a failure, which adds frustration to whatever they were already feeling. The achievable goal is emotionless execution rather than an emotionless trader: rules that decide, so the feeling has no vote, and a journal that records it.

"Trading without emotions" is a common search and a common ambition, and the research is clear that it is not available to human beings. Lo and Repin's traders, some with decades of experience, showed measurable physiological responses to market events. What separated the better performers in the follow-up study was a smaller reaction, and, more usefully, a smaller effect of the reaction on the decision, rather than any absence of emotion.

That points to the right goal. Emotionless trading is a property of a process rather than a state of mind. A trader whose size, stop, target, watchlist and daily limits are all decided in advance can feel everything in the table above and still execute the plan, because none of those feelings has a decision left to make. That is what experienced traders mean when they say they have become "emotionless." They still feel; they have stopped letting the feeling trade.

There is one further reason to give up the emotionless ambition. Some emotional signals are information. A strong sense that a trade is wrong, in a trader with years of screen time, is sometimes pattern recognition arriving faster than analysis. The plan should leave it alone, and the journal should record it, and if the journal shows that the feeling was right more often than not, the plan can be adjusted at the next review to account for whatever the feeling was detecting. The emotion is data; the plan is the decision.

Frequently Asked Questions

What is emotional trading?

Emotional trading is making a trading decision because of how you feel rather than because of what your plan says: entering because a move is exciting, exiting because a drawdown is uncomfortable, sizing up because a loss stings, or holding because closing would confirm a mistake. The feeling is normal; the decision it is allowed to make is the problem.

What are the main emotions in trading?

Six emotions account for most emotional trading: fear, greed, hope, regret, boredom and euphoria. Fear shrinks trades and skips setups, greed stretches targets and size, hope keeps losers open, regret prompts chasing and re-entry, boredom fills quiet sessions with unplanned trades, and euphoria switches the rules off after a winning run. Anger, a seventh, drives revenge trading.

How do emotions affect trading decisions?

Each emotion pushes one specific decision away from the plan. Fear cuts winners early and skips setups; greed moves targets further and raises size; hope widens stops; regret produces late entries and re-entries; boredom lowers the setup standard; euphoria raises size and frequency together. Each leaves a distinct pattern in the trade log, which is how a trader finds theirs.

How do I control my emotions in trading?

By removing the decisions emotions act on. Fix position size before the session. Place the stop and target with the order and never move them against yourself. Write the watchlist and entry criteria the night before. Set daily loss and profit stops. Take a recovery window after every loss. Journal the emotion with each trade; grade the day on adherence.

Can you trade without emotions?

No. Research on professional traders shows measurable physiological responses to market events even in people with decades of experience. What is achievable is emotionless execution: a process in which size, stops, targets, watchlist and daily limits are all decided in advance, so that whatever the trader feels, there is no decision left for the feeling to make.

Is fear or greed worse for a trader?

Fear is more common and greed is more expensive, but euphoria, which is greed after a winning run, is the most dangerous, because it arrives when the account is largest and switches every rule off at once. Fear costs opportunity; greed costs gains already made; euphoria costs the account. The fix for all three: size, stop and target fixed beforehand.

How do emotions change on a funded account?

The emotions are the same; the stakes are higher. A fixed maximum loss sharpens fear and hope, and a profit target sharpens greed and euphoria. Pipcy removes three pressures other firms build in, a daily loss limit, a time limit and a high minimum-days rule, but has no daily drawdown, so the trader's own daily stop supplies the discipline.

Emotional trading is letting a feeling make a decision the plan had already made, rather than the feeling itself. Six emotions do most of the damage, each produces a specific behaviour with a specific signature in the trade log, and each is neutralised by a specific rule: fixed size, unmoved stops and targets, a written watchlist, daily stops in both directions, a recovery window, and a journal that names the emotion. Control is the absence of a decision for the feeling to make, and nothing more.

On Pipcy Classic and Pips Mastery, the static 12% maximum, the 3-day minimum and the absence of a time limit or daily drawdown remove several of the pressures that sharpen fear, hope and boredom elsewhere. What remains is the trader, the six emotions every trader carries, and a plan that either has a rule for each of them or does not.

Written by Vladimir Rybakov, Head of PIPCY Academy, CFTe-certified with 19 years of trading experience.

Fact-checked by Snir Ahiel, former co-founder of The5ers and risk management specialist at Pipcy, with 15+ years trading Forex, Stocks, and Options.

Risk disclosure: Trading involves substantial risk. Pipcy provides simulated trading evaluations for educational and assessment purposes. Simulated performance does not represent real trading results, and becoming a funded trader is not guaranteed. Nothing here is financial or investment advice.