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Trap 1 — Revenge trading after a loss
The instinct to "make it back" doubles position size after a losing trade. The next loss is now twice as expensive. A losing day becomes a losing week.
System fix. Hard daily loss limit at 3R (three times your unit risk). At that level, platform closes for the day. No exceptions.
Trap 2 — Overleveraging on "sure things"
Conviction is not edge. The setups traders feel most certain about often cluster at the highs and lows of moves, where reversals start.
System fix. Cap maximum risk per trade at 2% no matter how good the trade looks. Better setups deserve longer holds, not bigger stakes.
Trap 3 — FOMO entries
Chasing momentum after a 200-pip move is the textbook way to buy a top. The setup that delivered the move has already paid out.
System fix. Pre-define your entry levels in writing before market open. If the level missed by even one pip, the trade is dead — wait for the next setup.
Trap 4 — Cutting winners early, holding losers
Behavioural finance calls this the disposition effect. Locking small gains feels safe; admitting losses feels painful. Result: tiny winners, fat losers.
System fix. Predefined take-profit and stop-loss on every trade. Move stop to breakeven only after price travels 1R in your favour. Never widen a stop.
Trap 5 — No journal, no edge
You cannot improve what you do not measure. Traders without a written journal repeat the same mistake hundreds of times before noticing it.
System fix. One-line journal per trade: setup name, entry, stop, target, outcome, lesson. Review weekly.
The unifying principle
The traders who survive turn every behavioural risk into a structural rule. Discipline is not character — it is software running on top of your default impulses.
