Day Trading Tips and Tricks

October 29, 2023

Indicator Warehouse

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Dealing with Losing Trades

Trading Buddy

I have been a trading software provider for over eight years. After thousands of hours of phone time with a broad range of traders, I’ve learned a lot about people, trading, and psychology. But, there is one phenomenon that continues to intrigue me. It is a fascinating kind of prejudice. A bias that values the body over the mind.

To understand what I mean by valuing body over mind, I will use an experience I recently had at a friend’s house. My buddy has a five-year-old son. The other night I watched the ritual as the little boy was getting ready for bed. He was standing on a stool at the sink brushing his teeth when he slipped and scratched his leg on the stool when he fell. He cried for a minute, but then he got back up, got back on the stool, and reached out for a box of Band-Aids to put one on his cut. Now, this kid could barely tie his shoelaces, but he knew you have to cover a cut, so it doesn’t become infected, and you have to care for your teeth by brushing twice a day.

We all know how to maintain our physical health and how to practice dental hygiene, right? We’ve known it since we were five years old. But what do we know about maintaining our psychological health? …Nothing!

What do we teach our children about emotional hygiene? …Nothing.

How is it that we spend more time taking care of our teeth than we do our minds?

Why is it that our physical health is so much more important to us than our psychological health?

We sustain psychological injuries even more often than we do physical ones, injuries like failure or rejection or loneliness. In fact, they can also get worse if we ignore them, and they can impact our lives in dramatic ways.

Trading Loses

And yet, even though there are scientifically proven techniques we could use to treat these kinds of psychological injuries, we don’t. It doesn’t even occur to us that we should. “Oh, you’re feeling depressed? Just shake it off; it’s all in your head.” Can you imagine saying that to somebody with a broken leg: “Oh, just walk it off; it’s all in your leg?” 

It is time we closed the gap between our physical and our psychological health. It’s time we removed the prejudice against our emotional well-being and made it equal to, and just as valued as our physical well-being.

I speak with traders every day. And, interestingly enough, the surface “trading technique” part of the conversation usually transitioned into a deeper psychological and emotional conversation very quickly. A common theme I hear from almost every trader is negative feelings from losing trades. Add to this a general bias toward ignoring one’s emotional well-being, and you left with the very real possibility of feeling profound and powerful self-loathing.

I once visited a daycare center, where I saw three toddlers play with identical plastic toys. You had to slide the red button, and a cute doggie would pop out. One little girl tried pulling the purple button, then pushing it, and then she just sat back and looked at the box, with her lower lip trembling. The little boy next to her watched this happen, then turned to his box and burst into tears without even touching it. Meanwhile, another little girl tried everything she could think of until she slid the red button, the cute doggie popped out, and she squealed with delight.

These three toddlers had identical plastic toys, but each had very different reactions to failure. The first two toddlers were perfectly capable of sliding a red button. The only thing that prevented them from succeeding was that their mind tricked them into believing they could not. Now, adults get fooled this way as well, all the time. In fact, we all have a default set of feelings and beliefs that get triggered whenever we encounter frustrations and setbacks.

Give Up Trading

Are you aware of how your mind reacts to losing trades? You need to be. Because if your mind tries to convince you that you are incapable of something, and you believe it, then like those two toddlers, you’ll begin to feel helpless and you will stop trying too soon, or you won’t even try at all. And then you’ll be even more convinced you can’t succeed. You see, that’s why so many people function below their actual potential. Because somewhere along the way, possibly just a single failure convinced them they couldn’t succeed, and they believed it.

Our mind is hard to change once we become convinced. So it might be very natural to feel demoralized and defeated after you fail. But you cannot allow yourself to become convinced you can’t succeed. You have to fight feelings of helplessness. You have to gain control over the situation. And you have to break this kind of negative cycle before it begins.

Our minds and our feelings are not the trustworthy friends we thought they were. They are more like a moody friend, who can be entirely supportive one minute, and unpleasant the next.

I recently worked with a trader who after 20 years away from the markets was finally ready to start trading again. He had watched some of our trading seminars. We had presented a clear path to success, and most importantly we came across as stable and professional. The trader purchased our trading solution and dove in. After two days into his trading come-back, he called me and said “Your system has bad signals… I’m out.”

Clearly, any losing was extremely painful for him. This gentleman was distraught. He told me he had called his friend, and this is what his friend said: “Well, what did you expect? You are stupid, and you let your fear rule you. Why would you expect to be a winner? Whatever made you think that you could be successful at trading?”

Trading Come back


Shocking, right that a friend could be so cruel? But it would be much less surprising if I told you it wasn’t the friend who said that. It’s what the man said to himself. And that’s something we all do, especially after a loss. We all start thinking of our faults and our shortcomings, what we want to be, and what we wish we weren’t. We call ourselves names. Maybe not as harshly, but we all do it. And it’s interesting that we do because our self-esteem is already hurting. Why would we want to go and damage it even further? We wouldn’t make a physical injury worse on purpose. You wouldn’t get a cut on your arm and decide, “Oh, I know! I’m going to take a knife and see how much deeper I can make it.”

But we do this with psychological injuries all the time.

Why? …Because of poor emotional hygiene… Because we don’t prioritize our mental health.

There is extensive research showing that when your self-esteem is lower, you are more vulnerable to stress and anxiety, that failures and rejections hurt more, and it takes longer to recover from them.

Trading Psychology

It doesn’t have to be this way!

When you have a series of losing trades, the first thing you should do is revive your self-esteem, not join Fight Club and beat it to a pulp. When you’re in emotional pain, treat yourself with the same compassion you would expect from a genuinely good friend.

We have to catch our unhealthy psychological habits and change them. One of the most harmful and most common is called rumination. To ruminate means to chew over. It’s when you fight with your spouse, or friend wrongs you, or you have a losing day in the markets. You just can’t stop replaying the scene in your head for days, sometimes for weeks on end.

Ruminating about upsetting events in this way can quickly become a habit, and it’s a very costly one. Because by spending so much time focused on upsetting and negative thoughts, you are putting yourself at significant risk of developing clinical depression, alcoholism, eating disorders, and even cardiovascular disease.

The problem is the urge to ruminate can feel very strong and very important. It is a difficult habit to stop. I know this for a fact because I used to obsess over my charts. I would print screen shots of every trade and review them at the end of the day. I would join trading forums and compound my problems by listening to others ruminate about the same issues.

Trading Break Out

Richard Friesen, Trading Psychologist and inventor of the Mind Muscles Academy has since taught me what to do. Studies tell us that even a two-minute distraction is sufficient to break the urge to ruminate at that moment. And so each time I have a worrying, upsetting, negative thought, I force myself to concentrate on something else until the urge passed. Usually, within one week, my whole outlook changes and I become more positive and more hopeful.

By taking action when you’re upset, by changing your responses to losing trades, by protecting your self-esteem, by battling negative thinking, you won’t just heal your psychological wounds, you will build emotional resilience, and you will thrive!

A hundred years ago, people began practicing personal hygiene, and life expectancy rates rose by over 50 percent in just a matter of decades. I believe our quality of life could increase just as dramatically if we all began practicing emotional hygiene.

Can you imagine what the world would be like if everyone were psychologically healthier? …If there were less loneliness and less depression? …If people knew how to overcome failure? …If they felt better about themselves and more empowered? …If they were happier and more fulfilled?

I can, because that’s the world in which I want to live! And if you just become informed and change a few simple habits, well, that’s the world we can all live in too.

Succeed at Trading

October 29, 2023

Indicator Warehouse

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