Trading Mistakes… And How To Deal With Them

“If you’re not making mistakes, then you’re not doing anything. I’m positive that a doer makes mistakes.”
–John Wooden

This article is updated and republished from several years ago… But it’s as relevant today as it was then… Maybe even more so.


I had my first losing day in quite awhile recently. And that’s not to say that I am loss free intraday everyday…quite the contrary in fact. I take intraday risk-management losses almost daily. However, I don’t often suffer overall losses for the day.

Wednesday was an exception.  

And trading mistakes were the culprit.

The loss was related to trying to “force” the market to give me my Daily Goal when it wasn’t being offered.

You know the situation… I was within a hair’s breadth of reaching the number of ticks I wanted to make for the day and made a decision based on that rather than listening to the “market’s music.”  The particulars aren’t all that important, but let’s just say by way of explanation that I wanted to make 80 ticks ($1,000 gross in the contract that I trade) for the day and I was at 78 ($975 gross).  

Enter those pesky trading mistakes.

  1. I took an additional trade instead of being satisfied with my results because I just had to reach that “magic number”
  2. I  took that “one more” trade at my full size because “Hey, why not obliterate my Daily Goal instead of just squeaking by if I was gonna go through all that effort?”
  3. I combined that oversize trade with my maximum allowable stop distance because I was sitting on “free money” in the form of the profits from the morning
  4. I didn’t really accept the risk because in the back of my mind I was thinking, “there’s no way price goes all the way back there…”

Do any or all of these look familiar to you?  

Notice what they have in common… They were all lapses in my Emotional Capital™ (EC).  

The market wasn’t “out to get me.”  My broker didn’t steal from me.  Neither the exchange nor my own technology broke down.

No… this loss was all me and my EC… or lack thereof.

Now the loss was within my risk parameters, so it wasn’t a big deal…except it was a big deal.  

A very big deal.

So I was annoyed.

I was angry.

I wanted revenge.

The loss was due solely to my trading mistakes.  Mistakes I made as I approached the end of the day.  MENTAL mistakes.

Worst of all?

I KNEW it wasn’t prudent when I was doing it.  I’ve been around long enough to know it’s not smart to be a “d$%k for a tick.” Or in this case 2 ticks, but the point remains the same.

I recovered the small loss on Thursday and had extended gains on Friday, but coming into the weekend, the only thing I was thinking about was why I made such obvious mistakes and, more importantly, how to avoid those mistakes going forward.

My answer?

Unfortunately, I’m unlikely to avoid repeating at least some of these mistakes in one form or another. 

Trading is risky by definition [in the form of there’s a chance of loss]. My job, as I see it, is to engage that risk intelligently…prudently even in order to secure profits.

I take steps such as minimizing the size of my positions and using stop losses to mitigate the inherent risks of engaging the market, but I can’t remove risk completely without removing the opportunity to profit (no risk, no reward).

So what did I do?

Step 1 — I stopped trading after 11am except in the rarest of circumstances.   There’s plenty of opportunity each morning and stopping by rule at 11am limits my afternoon transgressions by definition.

Step 2 — I also continue to remind myself that I will not make my Daily Goal everyday…and that that’s ok.

Step 3 — Most importantly, those particular mistakes became a part of my “experience bank” and will subconsciously inform my trading in the future. They’ll become the little voice that speaks to me the next time I am more than three quarters to my Daily Goal at the end of my trading day and maybe, just maybe, I’ll heed that warning.

Or maybe I’ll be writing another post about trading mistakes…


The Trader