One of the benefits to trading with a system is that it removes much of the emotion involved with choosing your trades.

You do not have to worry about deciding your entry and exit points, and whether or not the strategy you created is working. Rather, you can leave these elements up to the system provider.

That said, there is still a significant amount of emotion that comes into play when maintaining your portfolio.

The best way to remove emotion from trading is to plan as much as possible in advance prior to going live with your portfolio.

Many traders unfortunately focus their energy on what happens AFTER they have started trading their portfolio. Rather, the majority of your energy should go into controlling your leverage, diversifying your portfolio, and creating a balanced account breakdown BEFORE the systems go live.

Worst Case Scenario

Before you go live with a portfolio, you should fully understand the potential losses of your system.

Imagine that you have 3 systems in your portfolio, one with a -500 Max Drawdown, the other with a -300 Max Drawdown and the third with a -600 Max Draw down.

Though unlikely, you should not be too shocked if your system has a -1400 draw down at one point in
time. Furthermore, a conservative trader will always expect that the worst draw down is ahead of them. So if your system with a Max Draw down of -600 goes to -700, it should not be entirely unexpected.

It is also a good idea to look into the maximum consecutive losses that your system has endured.

If your system has a Win % of 50% and typically opens 12 positions at a time, then you should not be shocked if the first 6 trades that the system generates are losing trades.

To get a better idea of what to expect, you can check the System Performance page and sort through
the most recent trades placed by the system. Here you will actually see what the previous trades have been.

If you see that in the past month there was a period of 4 consecutive losing trades, you can mentally prepare yourself for a similar occurrence.

You can prepare yourself for the worst case scenario by always reminding yourself that the worst draw down could very well be ahead of you.

By mentally preparing yourself for these potential losses, you are far more likely to weather a draw down without manipulating the trades or immediately changing the systems in your portfolio.

Stepping Back

As a general rule of thumb, anytime you feel like your emotions are getting the better of you, take a step back from your trading to try and prevent making rash decisions like closing a trade prematurely.

When you do find yourself getting frustrated with the results of your system, it is helpful to take a look back at why they were unsuccessful.

Did you select a range bound system on the EURGBP right around when the pair started to break out?

Is the GBPJPY trending system you selected performing badly because the market is moving sideways?

Once you have identified logical reasons for the portfolio’s draw down, you should then ask yourself whether or not you believe that these market conditions will persist.

All too often traders will remove funds from a system after a draw down, only to miss the rebound. The key here is to avoid chasing the market.

Markets are naturally cyclical. Your system may be designed to perform well when the market is breaking out. If you add such a system, you will have to keep in mind that 80% of the year the market is going to be range bound.

Greed

If there is one emotion above all others that can quickly hurt a trader, it is greed.

As soon as greed enters the equation, you can find yourself making poor trading decisions.

A few good trades can raise your confidence and can lead to carelessness. For example, if you see that
one system in your portfolio has been outperforming the others, you may be tempted to remove some of the underperforming systems and/or allocate a higher percentage of your account to the more profitable (and often more volatile) system.

It is important to remember however why you chose the Account Breakdown that you did.

Trading is an emotional roller coaster. You go from the highs when you are profiting big, to the lows when you are down.

It is always best to do yourself and your account balance a favor and control these emotions.

A good resource is the trading psychology podcast - The Mind of a Trader.