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Mental Aspects of Day Trading

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Day Trading Commodity Futures Throughout my years in the futures industry, I have come to a conclusion in regards to the difference between winning and losing as a trader. In my opinion, the primary characteristic of successful traders is the ability to stay calm through thick and thin. This means avoiding the panic feeling that overcomes logic when trades are going against the speculation, and resisting the over-confidence that can come with a few winning endeavors. Each of these symptoms can have a severely negative impact on future trading decisions and profitability.

Thomas Jefferson said it best; “Nothing gives one person so much advantage over another as to remain always cool and unruffled under all circumstances.”


There are two components of fear when it comes to trading. The first is relatively obvious, traders fear the idea of losing money. This comes as no surprise; we work hard and don’t want to see the fruits of our labor waste away into the depths of a trading account. However, fear also stems from the potential angst of being proven wrong.

Fear is a natural and necessary aspect of risking money and should be felt by all traders; however, it is important to keep the emotion at a moderate level. Unfortunately, this is often easier said than done.

Those that find a way to deter feelings of fear altogether are inclined to accept too much risk and are exposed to an eventual trading account blow out. This is akin to a baseball player “swinging for the fence” and “striking out”, more often than not. On the other hand, those that are too fearful have a propensity to be late when entering markets and early exiting. Simply put, they have a tendency to get out of the market when they should be getting in and vice versa. The result is often the exact opposite of the overall goal of buying low and selling high!

Ideally, a trader would like to be humble in their ability to “beat” the market but able to pull the trigger on well researched and founded trading ideas, without being overcome with fear.

If you have traded futures, you have likely felt the wrath of fear. Further, if you have traded commodities in a manner in which you were undercapitalized, overleveraged or both, you have expectedly been exposed to elevated emotional turmoil. Anybody that has ever been in this situation knows; undercapitalization breeds fear.


One of the most well-known tag lines from the hugely popular flick of the 1980s, Wall Street, was “Greed is good”. Although controversial, there is some truth to the statement. Without some sense of greed, the financial markets would be without participants and all of the opportunities and risks available to traders would be obsolete. After all, it is greed that brought you to futures trading in the first place.

Like fear, greed represents two tiers of emotion. Greedy traders yearn for abnormal profits regardless of the posted risks, but they also “need” to be right. It is greed that sometimes prevents traders from taking profits, or cutting losses short, before they get out of hand. Don’t forget; a bird in the hand is worth two in the bush

–Carley Garner. Read more in Day Trading Commodity Futures by Carley Garner (FT Press Insights for the Agile Investor).

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