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What Your Mind Tells You When You Lose Money, And What You Can Do About it

What Your Mind Tells You When You Lose Money, And What You Can Do About it

Emotional pain is one of the most common ways that our mind reacts to a loss, or a string of them.

Below is a list of common questions/ comments your mind makes when you lose, which often stir up or intensify unpleasant feelings.

‘Why is this happening to me?’

This question sets you up to run through all your life problems one by one, seeing if you can pinpoint the causes of your misery.

Naturally, this just makes you feel worse because it locks you in a victim mentality – it creates the illusion that your life is nothing but problems.

It also leads to a lot of time lost in unpleasant thoughts and their associated feelings.

Here’s a better question to ask: 

‘How can I improve my response?’

Because you see, however much you feel bad for yourself, it’s not going to change a damn thing. The markets are going to do what they’re, in fact, best at doing — fool the most amount of people. And you’re not an exception to that rule.

The only thing you can control is your behavior — how you decide to respond to that.

And yes, it’s a choice! 

So, does this process of feeling bad for yourself help you in any practical way? I don’t think so…

It’s important to understand that the victim mentality will only exacerbate your pain which will lead you down unproductive paths in trading.

 

‘Why can’t I learn?’

If your losses stem from trading errors, this question sets you up for self-blame. You’re rehashing the same old things — all the ‘bad’ things you’ve done and can’t stop doing.

While this can eventually help you to stop making such errors, it also comes at a price: you’ll end up feeling inadequate, useless, worthless, and so it defeats its own purpose and usefulness.

Here’s a better alternative:

‘What can I learn?’

You see, there are no expert traders, only learners. Now, it’s true, some people are fast learners. Some not.

We all come into trading with our own inherent sets of strengths and limitations (whether it’s beliefs we hold on to or our inherent genetical predispositions). And it’s okay.

If you’re a slow learner and not particularly as disciplined or patient as you wish you were, you need to understand (and accept) the fact that things will take a little bit more time for you.

You will continue to make mistakes until you eventually learn. Make peace with that and learn to see your mistakes as stepping stones on your way to success.

One of the hardest thing in trading is to learn to love the journey instead of the destination. Yet it is key! 

 

‘Why can’t things go my way for once!’

Variations on this theme include ‘It’s too overwhelming’, ‘I can’t stand it’, ‘I can’t cope’, ‘I can’t adapt’, and so on.

Basically, your mind is generating stories about how you’re too weak to handle this, or that you need to control what’s on the outside (the markets or your trades outcomes) in order to be happy, feel whole, be successful, etc.

Reality check: You can’t control the markets. And so, when all is said and done, trading is all about learning to lose graciously. Because losses will happen and you can’t control that.

Here’s a better statement:

‘How can I be more flexible in my expectations…’

As soon as you enter a trade and G E N U I N E L Y release your expectations about that trade’s outcome, you become free. You can’t suffer anymore.

‘I shouldn’t feel like this…’

This is a classic! Here your mind attempts to defy reality. And reality is this: the way you are feeling right now is the way you are feeling. But your mind says this, ‘Reality is wrong! It’s not supposed to be this way! Stop it! Give me the reality I want!’

But is this effective? Does it change anything? Can you ever win an argument with reality and win?

No. At best, your views can only align with reality. So, here’s a better one:

So, here’s a better one:

‘How can I fully be with my feelings?’

You must learn to allow yourself to feel your emotions fully, without judging or rejecting them (clinging or averting), while never getting influenced by them.

Every good trader should possess this capacity. And it’s possible to develop this. I have. And many others have as well. And can too! The first step is that you have to start developing some basic curiosity about your inner life.

Here are some articles that might help with that:

The Best Skill Traders Need To Cultivate Right Now

Extremely Short Guide – How To Become An Emotionally Stable Trader (really)

You Are Not Your Mind!

Breaking Free From The Mind Movie

 

‘That move was obvious… I saw it coming!’

Finding excuses: one of the mind’s favorite hobby. (‘I knew this’, ‘The market makers were….’)

The tendency to always find a rationale for just about anything can keep you wrapped up in second-guessing yourself for the next trades, imagining past losses, or missing opportunities, and hence creating more stories.

Conversely, it can also trap you in a tendency to overestimate your ability to predict future outcomes that cannot possibly be predicted.

A better response would be this:

‘I didn’t know. And I don’t need to know.’

It’s okay to not know. And what’s amazing with trading is that you don’t even need to know. If you can be rigid with your trading plan and flexible with your expectations, you’ll see how far this can bring you.

Learning to lose graciously

The list of questions and comments could go on and on… but hopefully you get the point: If you want to change your experience of the trading game; if you want to change your behavior effectively, you have to start changing your pattern of thought. You have to begin thinking in constructive ways that will help you make progress, instead of hindering it.

Often, our minds create these stories because somewhere deep inside they believe that losses (or being wrong) will hurt us in some way and ruin our lives.

Because somehow such events have made us suffer in the past.

Losses signify failure, and failure is frowned upon in our society, which sets up many difficulties for us traders…

Hesitation in placing trades

Holding on to losing trades

FOMO (fear of missing out)

Those are just a few examples…

Our minds keep rehashing the old lessons learned even though those old patterns are not that helpful — especially not in trading.

As said earlier, trading is all about learning to lose graciously. Because losses will happen — they’re part of the game. And the sooner you learn to be T R U L Y okay with that, the sooner you’ll begin to improve your trading.

If you keep believing the things your mind tell you, you’ll automatically perceive losses as bad and the uncomfortable emotions that usually accompany those losses as a threat to your well-being.

And how does our brain respond to threats? It activates the fight-or-flight response. And this, then, gives rise to a whole new set of unpleasant feelings!

 

A useful analogy…

Suppose a distant uncle that you’ve actually never met shows up at your place, and you’ve been told many things about that person.

You’re heard that he’s a bad person – he’s despicable and no one can stand him because he always wants to control people and end up hurting them.

Here’s a question: If you truly believed those stories, what would your attitude be toward this person? Would you want him in your house? Would you want him anywhere near you and your family?

Of course not.

You’d do anything you could to get rid of him as fast as possible.

But what if all those stories were false or exaggerated? What if the guy was actually a great person who had just been the victim of calumnious and unjustified gossip?

This happens all the time, doesn’t it?

The only way you’d ever find out would be to spend some time with him, putting aside all the slander and the gossip, and checking him out for yourself.

You’ve probably already experienced something like this before. Maybe there was once someone whom you’d heard a lot of bad things about. Then you spent some time with them and saw through your own experience that they were nowhere near as bad as their reputation.

Or you may also have experienced the opposite — you may have heard a lot of great stories about someone and then finally met them, only to discover that they weren’t that great of a person.

In both cases the lesson is the same: your own direct experience is more reliable than all the stories you’ve been told.

Direct experience

It is in learning to handle unpleasant emotions that you will become a great trader. Just as in the analogy above, what you need to do is have a direct experience of them, to connect with them directly via your own observing, rather than automatically believing the stories your mind creates and rehash.

When you do this, you’ll discover that those feelings are nowhere near as ‘bad’ as you thought and you’ll realize they can’t possibly hurt you or overwhelm you.

One thing that will help you in this process is learning the art of detachment…

When you stop struggling with your feelings; when you allow them to come and go freely without getting attached or averting them, you become free to choose how you respond to things.

This is extremely powerful!

Acceptance breaks the vicious cycle of struggle and helps you develop into the kind of person you need to be in order to build a long and prosperous trading career.

This is what I teach in the Trading Psychology Mastery Course

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Yvan
I've been trading for a living since 2006. By merging mindfulness (an in-depth study of the mind and its tendencies in the present moment), a good trading process, and an efficient business practice, I went from being a losing trader to a consistently profitable one. Through my work here at Trading Composure, I aim at helping you do the same.
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