Having trouble keeping your cool in the stock market?

During the recent NBA (National Basketball Association) final, LeBron James, the Cleveland Cavaliers’ star player, fractured his right hand. Frustrated by the outcome of Game 1, he injured himself while taking his rage out on a board. His team never regained the upper hand after that, and the Golden State Warriors easily won the championship. In fact, after accumulating 51 points in Game 1, the superstar only scored an average of 28 points for the following three games. It's clear that his lack of self-control was the main reason for his team's defeat.

In poker, “tilt” is a term used to describe the emotional state of players who are no longer able to control the game by making rational decisions because they are overwhelmed by their emotions. For example, after a number of losing hands, a desperate player will try to regain lost ground by adopting a more aggressive style of playing, which severely affects their game.

As you have no doubt witnessed, tilt is a frequent problem on the stock markets. Who hasn't made impulsive buy/sell decisions after making a series of losing trades or suffering heavy financial losses? We're frustrated that our investment strategy isn’t giving us the results we want, that the stock market has proven us wrong or that active trading is so demanding. That’s why we deviate from our “game plan” by making an increasing number of transactions in hopes of recovering our losses.

The first and greatest victory is to conquer yourself.

Plato, Greek philosopher

Given the stock market’s capriciousness and unpredictability, investors must accept that any financial forecast could prove false. They must therefore demonstrate equanimity, i.e., the ability to keep their cool in any situation. More precisely, they must remain calm by focusing entirely on their next trade and ignoring the outcome of the last one. Contrary to popular belief, an active trader's end goal isn’t to make money, but to do the right thing at the right time. That's how you raise your chances of being profitable over the long term, the happy byproduct of a job well done.

To do so, I recommend keeping these three tips in mind:

Number 1: Stay open and flexible regarding changes in the stock market

To better control your emotions, don’t have any expectations about the final outcome of your trades and be aware that anything can happen in the short term.

Number 2: Run through a checklist before making a trade

It's easier to make mistakes when you’re on tilt. A checklist will help you follow your procedures to the letter by specifying the reasons for purchasing a stock, preparing an exit strategy and identifying target levels you need to look out for.

Number 3: Pay close attention to your emotional thermometer

Keep yourself from making impulse trades by paying attention to how you react when you lose on a trade. To do this, keep a logbook where you regularly note down your moods and non-constructive thoughts. That will help you understand that you need to limit your trading to when the circumstances are right and take action when necessary. For example, after you’ve made several unprofitable trades in a row, you’re better off changing gears by switching to another activity like meditation or physical exercise. The goal is to avoid making trades when you're on tilt.

Don’t forget, knowing how to manage your feelings is just as (if not more) important than technical expertise. Whether we’re talking sports or stock market investments, the pressure to deliver results is real, which is why it’s so important to keep your cool. That’s why I'm asking you to set up a framework to better guide your behaviour, without which you risk losing control and suffering long-term setbacks.

To learn more, come see me as I travel on a lecture tour this fall in Montreal, Quebec City, Trois-Rivières, Sherbrooke, Gatineau and Saguenay. For more information, go to www.disnat.com/avantages/tournee-educative (available in French only).


  • Cardschat. The Anatomy of Online Poker Tilt, 2018.
  • Christophe Remise. LeBron a joué les trois derniers matches avec…la main droite cassée, Le Figaro.fr, June 9, 2018.

The author

Michel Villa

Michel Villa

Speaker, stock market blogger and trading coach