In trading, one of the most common mistakes is not in the markets, the charts, or the numbers, but in OUR OWN MIND. And the worst part is that many times we are unable to see it. Daniel Kahneman, psychologist and Nobel Prize in Economics, left us a key teaching: we struggle to admit mistakes because it forces us to abandon the safety of our beliefs, even when they no longer serve us.
It's curious, isn't it? We prefer to cling to what feels familiar, even if it is leading us to failure, because change scares us. The fear of the unknown—of stepping out of our mental comfort zone—paralyzes us, even when we know that the path we are following is leading us to ruin.
WE HAVE ALL GONE THROUGH THIS. You make an impulsive trade without any solid strategy just because "it seems like a good idea." And when everything goes wrong, instead of reflecting and admitting the mistake, you cling to false hope: "The next one will be different," "It was just bad luck," "I must recover what I lost." Unbeknownst to you, you become a prisoner of your own wrong decisions. Why do we do this? Kahneman explains it masterfully: our mind has two systems of thinking:
The fast, intuitive, and automatic system: It is impulsive, acts without thinking too much, and seeks immediate answers. It tells you: "Buy that stock, it seems cheap" or "Keep holding that trade, surely the market will recover."
The rational and reflective system: It is slow, more analytical, needs time to process information, and seeks decisions based on objective data. This is the system you should use, but you almost never do.
In trading, most decisions are made with the FAST SYSTEM. It is easier, more comfortable, and gives us the illusion of control. But this system is also the one that leads you to ignore your mistakes, to not cut losses in time, to trade without strategy, and to treat the market like a casino.
AND THE WORST: it makes you believe that everything will turn out fine, even when you have no objective evidence of it.
The Bias of False Hope
There is something deeply human in clinging to losses, in not wanting to abandon a trade that is clearly failing. We prefer the false hope that "everything will be fine" before accepting the painful reality that we made a mistake.
We think AND YOU KNOW: "If I close this trade now, I lose everything. But if I hold on, maybe it will recover." I KNOW BECAUSE I HAVE BEEN THERE...
And so, losses grow. This does not only happen in trading, but in many areas of life.
Kahneman explains it well: the human mind PREFERS STABILITY OVER TRUTH. It is easier to keep doing the same thing, even if it affects our POCKET OR SOMETHING ELSE, than to admit that we need to change.
Self-deception in trading
Have you ever experienced this?
You make a positive trade and think: "I am a genius." But when you review your statistics, you realize that your long-term trading is a disaster. You buy a stock or cryptocurrency because "it is cheap," but you don't have a clear plan. Then it drops further, you panic, and sell at a loss. You trade impulsively, without strategy, and when you lose, you blame the market, the broker, or even luck.
This happens because your fast and intuitive system is deceiving you. It is that "friend" who pats you on the back and says: "It's okay, everything will turn out fine." But the market does not work that way. Without a plan, without discipline, without objective analysis, all you are doing is gambling.
The Solution: Get Out of Autopilot
The good news is that you can change this dynamic. But to do so, you need to get out of autopilot and give space to slow and rational thinking. Here are some practical ideas to achieve this:
THE FIRST STEP IS TO ADMIT THAT YOU DON'T KNOW ANYTHING ABOUT WHAT YOU ARE DOING.
This is not a sign of weakness, but of maturity. Every mistake is an opportunity to learn.
Ask yourself: Do I have a plan? Have I assessed the risk? Am I making this decision out of fear or because I really have a statistical edge?
Take trading seriously. Trading is not a casino.
If you want to succeed, you need to treat it as a profession.
It's been over 6 months since I did this exercise, the most visible sign is that I was very close to giving it ALL UP. I had discovered a strategy that had pulled me out of the "pit," however, I realized that this WAS NOT ENOUGH.
AND OF COURSE I HAD HEARD MANY TIMES THAT TRADING, LIKE ANY PROFESSION, TAKES TIME, STUDY, EFFORT, AND PRACTICE TO SUSTAIN IT AS A MEANS TO ACHIEVE FINANCIAL FREEDOM.
Discipline was not lacking, but I remembered a phrase I had read: the practice of trading does not guarantee that one day you will be profitable. Good practice does, having a proven system over time. Bad practice will only make you practice the error and NEVER GET OUT OF STAGNATION without knowing what you are doing WRONG.
HOWEVER, YOU CAN'T DO IT ALONE. In the markets, you are trading against the best algorithmic systems, the best institutions, those with vast experience, those who are better prepared than you to take away THE MONEY YOU HAVE ACCUMULATED WITH SO MUCH EFFORT TO STAY AFLOAT.
SOLUTION? Find someone who knows more than you and who can guide you, but not with false promises, but with a clear, effective, and proven system that helps you change your trading and probably your life forever.
Final Reflection
Kahneman taught us that the greatest enemy of our decisions is not outside, but within ourselves.
In trading, this is more evident than in almost any other activity. The key to improvement is not in the market, nor in finding the "holy grail" of strategies, but in understanding how your mind works and learning to manage it.
Admitting mistakes, letting go of the false security of the familiar, and learning to use slow and rational thinking can feel uncomfortable at first. But it is the only way to go from being an impulsive and losing trader to a disciplined and professional trader, with the right help.
The market does not forgive ignorance or lack of preparation. But if you are willing to work on yourself, learn from your mistakes, and make conscious decisions, trading can become a powerful tool to achieve your goals. Are you ready to leave behind your old beliefs and start anew?
In the upcoming posts, I will document my experience and who has been behind my progress in trading, all real without reservations.
These are reading times.