The Pendulum of Traders Emotions

During my trading lifetime, I have experienced most of the emotions that traders face. And these emotions behave like a pendulum - they swing from one extreme to another, unless moderated.
Pen*du*lum: Something that swings back and forth from one course, opinion, or condition to another.
Optimistic: expecting the best; "an affirmative outlook"
Pessimistic: expecting the worst possible outcome
I view extreme emotions as part of a continuum, where the ideal balance is somewhere in the middle, for example, at the fulcrum of a teeter totter. Fred and Farah learned a lot from their fellow entrepreneurial traders, Steve and Sally, including how to moderate their emotions. Let's try and understand these pairs of emotions and how they impact a trader's bottom line and modus operandi.
Do you think it is possible to always be optimistic as a trader? Let me ask you if the glass is half full or half empty? You know that one. What we know about trading is that what shows up in life shows up in trading, so that an optimistic person will generally see a losing trading day as a glass that is half full, as there is always another opportunity and another day. An optimistic trader will take setbacks in stride and move on most of the time, saying out loud, "I've made a few losing trades, so what? I've made more positive trades than losers, so take that one!"
Optimistic Scenario: Trader Fred is called the eternal optimist. He has a trading methodology which he feels comfortable with. He knows his numbers - how many wins he gets vs. losses. When Fred takes losses, and he does, he trades the same way. If Fred has 3 losing trades in a row he knows that the next trade will likely be a winner because he usually doesn't lose 3 times in a row. So his optimism grows. "When I have a few losers, I know a winner is right around the corner!"
Fred will survive during depressing, unpredictable markets. He will look for trading opportunities in other currencies if his currency pair of choice is trendless. Fred's brain is wired to think that there will always be another trade next time. He will not doubt himself just because he loses - his confidence is solid. (Fred continues to trade his strategy and as long as the results are there he takes his trades in stride.)
Pessimistic Scenario: Trader Farah is depressed because there is doom and gloom out there. And that is affecting her trading. She just made a series of losing trades, and she is starting to feel down, and is thinking, "I'm not as good a trader as I thought I was. Maybe I should stop trading for awhile."
There are times when you just want to have a winning streak again. If it doesn't happen, it is easy to fall prey to disappointment and pessimism. Farah needs to figure out a way to "change" her mood, find that winning mindset again deep inside her and pull it out. (Farah keeps a glass in front of her which is more than half full and reminds herself of her winning trades in the past.)
Tips to Temper the Emotions:
1. Complete a business plan and test the trading methodology.
a. When experiencing losses and bad moods, practice the strategy on a demo account to see results. When in pessimism, practice, practice, and practice on the demo account.
b. Once the trading method is proven again on a demo account, optimism and confidence will return to the pessimistic trader.
c. In the long run, if trading is run as a business, the profits will come. It's time to temper those pessimistic emotions!
Setting up a business trading plan that develops positive habits,which, if followed, will save you time and effort, helps you make more money, and encourages you to achieve your full potential as a foreign exchange trader.