Emotional trading will destroy your portfolio if you let it: Veteran trader

Sat, Apr 5, 2025, 11:53 AM 3 min read

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Longtime stock traders know the high that comes with a continued return on their investments. But it’s also incredibly easy for even the most experienced investor to have a knee-jerk reaction to sudden downturns in the market.

The possibility of a recession looming over the economy makes it even more likely that some investors will be tempted to bail the moment their investments begin to tank. However, according to Trader Talk host and veteran trader Kenny Polcari, letting these fears inform your trading will “destroy your portfolio.”

“The markets don't care about your feelings,” Polcari said on an episode of the Trader Talk podcast (see video above or listen below). “They don't care if you're afraid, hopeful, angry, or desperate. The market moves on fundamentals, on earnings data, on economic data, and reality."

"It does not move on your gut feelings," he continued, warning investors that letting emotions make decisions is "a recipe for disaster."

It’s easy to see why even experienced traders may be tempted to bail out sooner rather than later. On Friday, JPMorgan became the first Wall Street bank to forecast a recession in 2025 while Yardeni Research raised its recession odds to 45%.

“I see it all the time,” he said at the opening of Trader Talk. “Traders jump into the market, they're fired up. They chase momentum, they feel euphoric, and then they're up and panicked when they suddenly turn down. Here's the truth: Trading on emotion is a guaranteed way to lose money all the time.”

“If you want to succeed, separate emotion from the action,” he continued. “Make decisions based on strategy, discipline, and analysis, not impulse. Define your entry, set your stop loss, and know your exit before you even enter your buy button.”

Read more: How to protect your money during economic turmoil, stock market volatility

It can be difficult to continuously adjust your trading strategy based on analytics and data, especially as the US market has grown increasingly unpredictable. Kristina Hooper, the chief global market strategist at Invesco, admitted that the 2025 outlook released in November 2024 was “probably fairly conventional.”

"Our expectation was that we would avoid a recession globally and that the US would [as well]," she said. "In fact, the US would have a very modest slowdown and then have a reacceleration in growth, ... bringing along other Western developed nations."