Diagnosing your Trade Monster

Last week, we talked about what a Trading Monster is. To recap, a Trading Monster lives inside of you and it that takes over, distracting you from your trading plan and causing you to make foolish decisions and mistakes. These mistakes can ultimately make you lose money.

So I felt it was appropriate to actually discuss Trade Monster symptoms, so you can identify them in your trading.

Here’s a list of symptoms to start…

Trade Monster Symptoms

  • Buying without a setup
  • Risking more than is appropriate per trade
  • Feelings of extreme euphoria when trading
  • Planning large purchases with future trading profits
  • Exiting great trades too early
  • High Five Trade
  • Too many distractions
  • Refusing to shift methodologies when the market shifts
  • Extreme hopelessness
  • Lack of discipline
  • Forgetting Mr. Market is in charge
  • Insert your favorite one here…

This isn’t an exhaustive list, but, it incorporates many of the most common symptoms. These are the feelings you have or the actions you take, that ruin your chances of making money. In order to conquer your Trade Monster, you must recognize these symptoms when they appear — and take decisive action.

These symptoms appear at different times.

For example, remember last January and February, when the market was skyrocketing higher? Did you perhaps get too euphoric, add too much risk, or share too many high fives during this time frame? If so, then you were visited by your own Trade Monster.

Or, perhaps they appeared in March — when the market was crashing, the indexes went limit down multiple times per week, and you may have lost hundreds of thousands of dollars in your retirement account. Did you feel hopeless or like you needed to throw on trades to repair the damage? Again, this was a visit from your Trade Monster. 

Have you experienced these symptoms?

Which ones take the most money from you?

For me, it used to be euphoria — before I learned how to tame that monster, but lately, it’s been the high five trade. I swear, every time I congratulate myself over a good trade (before it’s closed) it immediately goes to a loss. Drop me a comment below and tell me, how does your monster show itself? 

In next week’s episode, we’re going to talk about what triggers your Trade Monster.

6 thoughts on “Diagnosing your Trade Monster”

  1. I have a tick next to most of those descriptions. Jumping in too early, trading too big and too often. Desperation, and fear of missing out. I know I have a while heap of monsters, I’m looking forward on finding out how to tame them.

    Reply
  2. Hey Danielle,
    This was the most resonating article I’ve read! And I’ve been trading and learning from the markets since 1994! Man!
    So my trade monster is similar. It used to be the pyschological HIGHs from discovering a winning trade and every time my options trade went in the money like 100%, I’d be SO EXCITED, that I’d be greedy and hope for the continuation and hold on for too long. Cause you see, before 2000, the market was in a bull market and I thought I was the man. And I was winning from the start. Boy, I wish I made losses back then so I could have dug deeper and reflected.

    Nowadays, after having learned some more, my NEW trade monster is relying on my fundamental analysis and trying to pick tops or bottoms. And when I am wrong, I dis-obey my Exit rules. ARRRGH!
    So the solution to my trade monster is to stick to my exit rules.

    Thanks Danielle!

    Reply
  3. Lack of discipline biggest one for me… its 130am the markets are just about to open, I have feelings like, just go back to bed you don’t need to adjust anything leave it alone, now is not the right time to close out. This week I had the said thoughts, it cost me. I had my plan in place, I had been waiting for the right moment for almost a week. I missed the trade trigger due to being lazy.

    Reply
  4. I would say I posses the following in my trade monster;

    Buying without a setup
    Risking more than is appropriate per trade
    Feelings of extreme euphoria when trading
    Planning large purchases with future trading profits
    Exiting great trades too early
    Too many distractions
    Refusing to shift methodologies when the market shifts
    Extreme hopelessness
    Lack of discipline.
    Revenge trading is big for me as well, when I lose and get into a panic about meeting my goals I will revenge trade my way into bigger losses. All things I am working hard to identify and erase from my trading

    Reply

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