In today’s episode, we are going to be discussing how to break your bad trading habits so that you can finally achieve the results that you deserve! 

Traders are constantly telling us that they are aware of the habits that are weighing them down but for one reason or another, they just can’t seem to stop themselves from repeating them again and again. 

These patterns occur at a subconscious level without our being able to control them and this can become frustrating very quickly and lead to trading on tilt which is when things can really start to spiral out of control. 

Oftentimes, these bad habits are developed early on in the trading journey (especially if you stay in demo for too long) and will stick with you until you either face them head-on and change them or get frustrated enough with trading to decide that it’s not for you and you exit the industry. 

Our goal today is to help you identify some of the habits that are causing you frustration in your trading and to provide you with practical solutions to disrupt these patterns so that you can replace them with habits that will serve you! 

What is a habit? What causes bad habits? 

  • an acquired mode of behavior that has become nearly or completely involuntary
  • In layman’s terms; a habit is an action taken in the past that worked to solve a problem which the brain thinks is now acceptable to use for all relevant situations in the future
  • Our brain is always seeking efficiency and will use habits that we have developed in order to deal with situations that it commonly face
  • The purpose of every habit is to solve the problems that you face 
  • The primary cause of bad habits is a way of dealing with stress and boredom 
  • Bad habits address certain needs in your life 

The Feedback Loop 

  • There are four stages of a habit which are commonly referred to as a feedback loop, which is a continuous cycle that runs every moment you are alive
  • The four stages of the feedback loop  include (1) Cue (2) Craving (3) Response (4) Reward
  • The cue triggers the brain to initiate a behavior; it is about noticing the reward 
  • The cravings are the motivational force of the habit – without it, you have no reason to act – you do not crave the habit but rather you crave the change in state that it provides (aka the reward)
  • The response is the actual habit that you perform; it is about obtaining the reward 
  • The reward closes the feedback loop and completes the habit cycle
  • As it relates to trading, a good example of this would be someone that has the habit of adding to positions when they go against them 
  • If this works ONCE, then your brain will remember that this action solved your problem before and it will use this habit again when faced with similar circumstances  
  • Cue – A trade that goes into the red 
  • Craving – You do not want to lose money on the position
  • Response – You add to your position (martingale) in an attempt to get back to green 
  • Reward – If the market returns and puts you back into the green

Common Bad Habits in Trading: 

  • Taking boredom trades because of lack of patience 
  • Chasing trades due to FOMO 
  • Revenge Trading 
  • Moving stops and taking big losses 
  • Cutting winners short 
  • Risking too much on any given trade 
  • Giving back profits throughout the trading session 

How to Break a Bad Habit

  • Each of the four stages mentioned earlier can be considered to be like a domino that influences human behavior.
  • When one domino falls, it triggers a series of decisions that will either hurt or help you; this all happens within a fraction of a second 
  • The first step to breaking a bad habit is awareness! Ask yourself: When does the bad habit actually happen? What triggers the behavior and causes it to start? 
  • If you eliminate the cue, the feedback loop cannot start 
  • If you reduce the craving, then you won’t experience the motivation to act 
  • If you make the response (behavior) difficult, then you will not be able to do it 
  • And finally, if the rewards do not satisfy your desire, then you won’t be motivated to do it again in the future
  • Visualize your negative trading pattern as an enemy that is the ONE thing that stands in the way of your trading success:  visualize all the negative consequences it has caused you, all the emotional pain; 
  • If you visualize something as your enemy, will you buy into it? NO 


Leave a Reply

Trader Development Programs

Join our community and take your trading to the next level with one of our monthly subscription packages.  Learn how to swing trade stocks and options, day trade futures like a pro or get both in the ELITE monthly membership.   Start today, and trade with the professionals.

Close Menu