Misconception 4: Emotions cause my trading loss. No, emotions DO NOT cause your trading loss. To claim causal relationship between your emotions (fear, greed or whatever emotions/feelings you can think of. By the way, make sure you clearly define the word emotion. I prefer the definition of physiological responses such as faster heart beat/higher blood pressure/sweating/vomitting/etc.) and your loss, emotions must come BEFORE your loss. The fact is that your emotions often occur AFTER your loss. Therefore, there is no way your emotions are the cause. Also, we often make an attribution error by considering a correlating variable as the causal variable. For example, wearing a red T-shirt is associated with good performance in an exam. Superstitious beliefs and behaviors are mostly based on mere correlation. However, correlation is not causation. A physiological response (emotion) associated with your trading loss is not necessarily the cause. There are many other variables associated with your loss: the presence of oxygen, your nagging wife, your barking dog, or the pictures on the wall. Will you attribute your loss to any of those? You don't, because you know they are not the causes. Similarly, you shouldn't blame your physiological responses, i.e., your emotions. If you understand that emotions have no role in your trading loss, you should discard all those erroneous ideas sold in dozens of trading psychology books. I hope one day we will look back at this era of trading and laugh at this trading voodoo called emotions.