Emotional Decision
Impulsive decision driven by emotion, often against the trading plan.
Beginner-friendly explanation
An emotional decision is when you act under fear, anger, or euphoria, ignoring your planned strategy. In trading, this often leads to buying or selling at the wrong time.
Example: You see a big red candle and sell in panic. Then the price rebounds. You acted emotionally, not logically.
Intermediate-level insight
Emotional decisions are influenced by cognitive biases (confirmation bias, loss aversion, etc.) and market pressure. They undermine consistency, distort judgment, and sabotage long-term success.
Example: A trader sees their stop nearing. Out of fear, they move it further to 'avoid the loss.' The trade ends in a bigger loss — they broke their system.
Advanced perspective
In systematic or algorithmic trading, emotional decisions are seen as noise variables. Advanced traders build emotional control protocols (journaling, meditation, post-trade review) to minimize their impact and maintain operational discipline.
Example: A fund manager enforces strict entry/exit rules and forbids manual intervention unless backed by external signals — neutralizing emotional impulses.
Psychology & Behavior
emotional decision, impulsiveness, fear, anger, euphoria, cognitive bias, discipline, sabotage