How to Mentally Recover from Your Worst Trades

Every trader makes really big, stupid mistakes in their career. Any trader that hasn’t should know it’s just a matter of time before they do. After these bad trades happen, there are two ways forward: holding onto regret or letting it go. 

For any traders who still have regrets, the purpose of this blog is to offer a perspective shift that can help them let go. In fact, letting go is essential to rebounding and becoming profitable again, so keep reading. 

Elite Traders Lose Money

Every successful trader takes bad trades – it’s just part of the game. Even the greatest traders have fat-fingered a trade and lost money. Elite traders have without exception accidently typed an extra 0 into the order form or accidentally clicked the wrong button. But despite these mistakes, they’ve still made it.

And if they've messed up badly and still made it, then technically so can any other trader.

Usually, the reason why traders become so upset with their mistakes is probably because they had the expectation that they will never make such a stupid mistake or that they will never make such an expensive mistake. It’s natural to be disappointed when expectations and reality do not match. 

But this way of thinking is nonsense. 

Even if someone could unquestionably consider themselves to be a trading legend, they would still make errors – including big ones. These mistakes would just come at a lower frequency is all. Every struggling trader must keep this in mind. 

Costs of Doing Business

Trading is a grueling mental game, so it’s important to have the right mindset about losses. On one hand, a trader could look at their mistakes and think about them with the framing if, "I'm so fucking stupid! How could I have done this?" Then they will continue punishing themselves unnecessarily. 

Or there’s another option. 

Instead of beating themselves up, a trader could simply say, "This is the cost of doing business. Now, what can I learn from this mistake?" Then walk away on a positive note and move on to the next trade. 

This isn’t toxic positivity. Honestly, think about it. 

Will a trader improve at a faster rate by constantly punishing themselves? No, at least not in the long term. Negativity is barely even a short-term solution. Or will a trader improve by feeding themselves dopamine and by training their mind to a reward every time they learn something new from a mistake?

The answer is obvious. 

Trust the Process

Trading is about discipline and good processes. The primary focus is not on getting good results. In my own trading, I have found that when I stop optimizing for a better result and instead start optimizing for a better process, I get better results anyway. 

With that mindset, it only makes sense to care about the process in order to get the desired outcome. Focusing on the outcome instead can lead to mistakes. And part of focusing on the process means traders need to stop bashing themselves over errors, big or small. 

This article is an adaptation of a thread written by the same author and posted to Twitter here.