What’s the biggest enemy in trading?
Here’s a hard truth: it’s not the market—it’s you
What’s the biggest enemy in trading? Here’s a hard truth: it’s not the market—it’s you. Yes, you. Your emotions, your impulses, and those moments of panic when the market takes an unexpected turn. But don’t worry; there’s a simple way to overcome this. Stick to your plan.
Why You Need a Plan
Think of your trading plan as a GPS. When you don’t follow a GPS, you might take random turns, thinking you’ll find a shortcut, only to end up lost or stuck in traffic. Similarly, veering away from your trading plan often leads to confusion, mistakes, and unnecessary losses. Trust the path you’ve mapped out—it’s there to guide you, not mislead you. When you’re driving to an unfamiliar destination, you wouldn’t randomly take side streets every time traffic slows down, right? You’d trust the GPS to guide you, knowing it’s calculated the best route. Your trading plan works the same way. It’s your roadmap to success, built on research, strategy, and logic—not emotion.
But here’s the catch: having a plan isn’t enough. You have to follow it. And that’s where most traders trip up.
The Danger of Acting on Emotion
Let’s face it. Trading can be emotional. Imagine this: you’re watching a stock you’ve been eyeing for days. The price dips slightly, and your gut screams, “Get out now!” Or maybe it spikes unexpectedly, and you feel an uncontrollable urge to buy more, fearing you’ll miss the train. These moments of emotional turbulence test every trader’s resolve. Your heart races, your palms sweat, and you feel the urge to take action—any action—just to ease the tension. Maybe your stock’s price is dropping, and you’re tempted to sell before it hits your stop-loss. Or perhaps the price is climbing, and you’re itching to take profits early, even though your target hasn’t been reached.
These impulsive moves might feel good in the moment, but they’re often just a way to avoid sticking to your plan. And here’s the irony: the very plan you’re avoiding is what would’ve helped you succeed.
Know Thyself (and Your Triggers)
One of the most important lessons in trading is self-awareness. Ask yourself:
Do you tend to panic during market dips?
Are you overly eager to lock in small gains?
Do you struggle to cut losses?
Recognizing your tendencies is the first step to overcoming them. Once you know your triggers, you can prepare for those moments and stick to your plan, even when it feels uncomfortable.
Real-Life Examples
Imagine this: You’ve done your homework and entered a trade with a plan to sell at a 100% gain. The stock starts climbing, but when it’s up 20%, you get nervous. “What if it drops back down?” you think. Against your plan, you sell early.
Now, consider another scenario. You’ve planned a trade. There is a fast dip exactly to where you planned your entry but you think what if it keeps dropping? You don't get into the trade, then it rips, and now you are sure it will continue so you chase the entry, it dips again and you get stopped out at your new stop price just before it turns again and moves to your original goal/target without hitting your original stop!
Has that happened to you? You need to address these emotional triggers.
Tips to Stick to Your Plan
Write it down: A written plan is harder to ignore. Include your entry and exit points, stop-loss levels, and position sizes.
Set alerts: Use trading platforms to set price alerts for your target levels. This reduces the urge to constantly check your trades.
Limit screen time: Watching the market all day can tempt you into overtrading. Step away and let your plan do its job.
Review your trades: After each trade, analyze whether you followed your plan. If you didn’t, ask yourself why and learn from it.
Final Thoughts
Trading success isn’t just about strategy; it’s about discipline. The market will test your emotions, but your plan is your anchor. So the next time you’re tempted to act impulsively, remember: stick to your plan. Your future self will thank you.