Most traders know what they should do. The hard part is doing it with real money, after three losses, when the market is moving fast. Trading psychology is about understanding the forces that push you off your plan, and building habits and rules that hold anyway.
The common biases
| Bias | What it looks like | Counter |
|---|---|---|
| Loss aversion | Holding losers too long, cutting winners too early | Stops and targets set before entry, then left alone |
| Revenge trading | Jumping back in right after a loss to win it back | A pause rule after any loss |
| Fear of missing out (FOMO) | Chasing a move that already happened | Only enter at planned levels; there's always another trade |
| Overconfidence | Increasing size after a winning streak | Fixed risk per trade, whatever the recent results |
| Recency bias | Judging a strategy on the last few trades | Review over 50–100 trades, not five |
| Confirmation bias | Only seeing evidence for the trade you want | Write the case against the trade before entering |
Tilt
Tilt is the emotional state where decisions are driven by frustration rather than the plan. It usually starts with a loss, often an unlucky one, and feeds itself. Most account-ending days are tilt days.
Practical defences
- Rules that remove decisions: maximum trades per day, stop after two losses, no trading in the first minutes after a loss.
- Small size: fear and greed grow with the amount at risk. If a loss makes your heart race, the position is too big.
- Process goals: judge each day on whether you followed the plan, not on profit and loss.
- Physical state: sleep, food and breaks matter. Tired traders take worse trades.
- A journal: write how you felt before and after each trade. Patterns appear fast.
Key takeaways
- Loss aversion, revenge trading, FOMO, overconfidence and recency and confirmation bias push traders off their plans.
- Tilt is a loop of frustration and bigger, worse trades; most account-ending days are tilt days.
- Rules that remove decisions, small size and process goals are the most reliable defences.
- Journal your emotions alongside your trades to spot your own patterns.