Trading psychology
Fear, greed, boredom and revenge: the feelings behind most bad trades, and simple habits against them.
5 minLesson 3 of 32 questions at the end
Key ideas
- 1Most damage comes from a few emotional trades: chasing a pump, doubling after a loss, moving a stop.
- 2Write the plan before you enter: why, where you are wrong, where you take profit, and how much you risk.
- 3A loss with a plan is part of trading. A loss without one is the thing to fix.
- 4Taking a break after a bad trade is a skill, not a weakness.
The usual suspects
Fear of missing out
- Buying after a big candle because everyone is
- Usually buys the top of a move
Revenge
- A bigger size after a loss to win it back
- Raises risk when judgement is weakest
Hope
- Moving the stop because the price “will come back”
- Turns small losses into large ones
Write the plan first
Before each trade, answer four questions. If you can’t, don’t trade yet.
- 1Why am I entering?
- 2Where am I wrong? That is the stop.
- 3Where do I take profit?
- 4How much do I lose if I am wrong, and is that within my risk per trade?
Habits that help
- Set exits, then step away. Watching every tick invites bad decisions.
- Stop for the day after a set number of losses, or use a daily loss limit.
- Keep the risk per trade the same after wins and after losses.
- Review losing trades for what you can change, not for blame.
Common mistakes
- Revenge trading: a bigger size to win back what was lost.
- Fear of missing out: buying after a big candle because everyone is talking about it.
- Checking positions all night. Set exits, then step away.
Check yourself
Question 1 of 2
You just lost on a trade and want to open a bigger one to win it back. What is that?
Keys 1 to 3 pick an answer, Enter checks it
Try it in Lance
Your stats show each round trip with notes and tags, so you can see which habits cost you.
Review your trades