Trading Psychology & Mindset

Nervous About a Trade? Your Position Is Too Big.

If you've done your homework, the stock has the characteristics of past market leaders, and it fits your process, but you're still nervous before entering the trade, the answer is usually simple:

Get smaller.

For one trader, that might mean a $100 position. For another, it might mean $1,000, $10,000, or $100,000.

The dollar amount does not matter. What matters is risking an appropriate amount based on your system and your own ability to follow the plan without fear taking over.

Say your system allows you to risk 1% to 2.5% of your total portfolio on a trade, but you still feel pressure, fear, or hesitation. Drop the risk until that feeling goes away.

Maybe that means risking 0.25% of total equity. Maybe it means even less.

That is fine.

If you're constantly checking the position, losing sleep, or second-guessing every tick, your size is too large for your current comfort level.

Reduce it until you're completely comfortable.

Trading is psychological. The right position size is different for every person. Over time, as your confidence and experience grow, your size can grow too.

But the solution to fear is rarely more courage.

It's usually smaller size.

Eventually This Pullback Will Fail

And that's perfectly okay.

FIX is pulling back toward the 10-week moving average again. I been talking about this name for years and since I first started sharing names with subscribers.

One day, a pullback like this won't work.

One day, I'll buy a leader on a pullback, and it will fail.

I'll take a loss.

That's not a flaw in the strategy.

That's the cost of doing business.

Many new traders make the mistake of thinking they need to know exactly when a stock's run is over.

You don't.

Nobody does.

The goal isn't to predict the end.

The goal is to participate in the trend while it lasts.

Great leaders can keep working much longer than most people think is possible.

So we continue buying proper pullbacks and setups until the stock proves the trend is over.

Sometimes we'll be wrong.

We'll take a small loss and move on.

But if you've been participating throughout the trend, one small loss at the end doesn't erase the gains made along the way.

That's how this works.

We don't need to know when the run will end.

We just need to be willing to participate until it does.

The Market Does Not Care About Your Macro Opinion

I’m hearing macro guys again screaming about how equities shouldn’t be making new highs.

• Oil shock.

• War with Iran.

• Rising rates.

• Inflation fears.

It makes me laugh.

This bull market has already climbed through many reasons people said it should fail.

• Hot CPI and PPI prints.

• War in the Middle East.

• An inverted yield curve.

• Tariffs.

• Recession calls.

• Debt fears.

• Banking stress.

• Bubble worries.

And still, the market made new all-time highs.

At some point, that should make traders stop and think.

If your model keeps saying stocks should not be going higher, but stocks keep going higher, maybe the problem is not the market.

Maybe the problem is you.

Macro matters. I follow it.

But price, trend, relative strength, and risk management matter more.

The market does not reward the best sounding thesis.

It rewards those who respect price action.

If stocks are breaking out, semiconductors are leading, relative strength is improving, and institutions are accumulating shares, that is information.

You can argue with it.

You can explain why it should not be happening.

Or you can respect it and make some money.

The best traders I study were not married to a macro narrative.

They followed price.

Are you here to make money, or to sound smart?

Most Traders Don’t Have a Strategy Problem

Most traders think they need a better setup.

A better indicator.

A better stock pick.

But usually, that is not the real problem.

The real problem is that they are weak in one of the three pillars:

• Risk management.

• Mental discipline.

• Strategy & Tactics.

You can have a great setup and still lose if your risk is too big.

You can understand risk and still fail if you cannot follow your rules under pressure.

You can be mentally tough and still struggle if you do not have a strategy with positive expectancy.

Successful trading is not built on one thing.

It is built on all three working together.

That is how you move from random results to consistent profitability.

Sometimes You Have to Burn the Ships

Most people say they want change.

But what they really want is comfort with better outcomes.

They still want to keep every escape route open.

At some point or for most people that does not work.

Sometimes you have to burn the ships.

Not recklessly.

Not emotionally.

Not without a plan.

But decisively.

Because sometimes having no escape is exactly what forces you to become who you said you wanted to become.

When there is no fallback, you stop negotiating with yourself.

You stop making excuses.

You stop waiting for perfect conditions.

You stop pretending you are committed while quietly protecting the old version of your life.

That pressure can feel really uncomfortable.

But sometimes that pressure is needed.

Sometimes desperation is not the enemy.

Sometimes desperation is the fuel.

It forces you to push through, make the necessary changes, do the necessary work, and develop the level of discipline you never would have developed if retreat was always available.

The best traders understand this.

The best entrepreneurs understand this.

There comes a moment where you stop dabbling.

You stop “seeing how it goes.”

You stop keeping one foot in the old identity while pretending you are building a new one.

You decide.

You commit.

You remove the easy exit.

Because sometimes the only way to become the person capable of winning…

Is to make going backward impossible and moving forward the only way.

“I really feel that if you can trade one market, you can trade them all. The principles are the same. Trading is emotion. It is mass psychology, greed, and fear. It is all the same in every situation.”

-Michael Marcus

Most People in the Market Don’t Actually Want to Make Money

That sounds harsh, but it’s true.

Most people involved in the stock market say they want to make money.

But their behavior says otherwise.

They are really there to feel something.

Excitement.

Validation.

Entertainment.

The need to be right.

It is no different than gambling at a casino.

Most people know the odds are stacked against them, yet millions still show up, place bets, and call it fun.

The stock market is no different.

A lot of people say they want profits, but their behavior says they want action.

They don’t want a process or strategy.

They don’t want risk management.

They don’t want rules.

They don’t want to put in the work.

They want the rush.

Because if they truly wanted to make money, they would behave differently.

They would study.

They would track their trades.

They would manage risk.

They would follow rules.

They would stop confusing activity with progress.

And until that changes, the market will keep doing what it has always done:

Transferring money from the emotional to the disciplined.

The IPO Trap Most Traders Fall For

A lot of people are getting excited about a potential SpaceX IPO.

And I get it.

Big company. Big story. Big hype. Lots of emotion.

But this is where a lot of inexperienced investors get caught.

They buy on day one with no game plan.

No entry strategy.

No risk plan.

No understanding of how IPOs usually trade after the excitement fades.

Could a stock launch and just keep running higher?

Of course.

Anything can happen.

But if you study enough big IPOs, you will see the same thing over and over again.

Many sell off shortly after launch.

Some run for a few days or a few weeks, then roll over.

Some drop 40%, 50%, 60% or more before they ever build a real base.

That does not mean the company is bad.

That does not mean the stock can’t become a huge winner later.

META is a great example. After its IPO, it dropped roughly 60% before eventually recovering, building, and going on a massive run.

BABA also had an exciting debut, rallied for a few weeks, then eventually dropped more than 50% before later setting up again.

The point is not “never buy IPOs.”

The point is this:

Do not let the story make you abandon the process.

One of the easiest ways the market suckers people in is through big, exciting IPOs.

A great company does not always make a great investment at any price.

And a great company definitely does not mean day one is automatically the right time to buy.

People feel like they have to get in immediately or they will miss it forever.

That is usually not a strategy.

That is FOMO.

Many times, traders would be better off letting the excitement cool, waiting for the first major pullback, watching price digest, and then looking for a real base or proper setup.

Often, the best time to buy is not day one.

It may be 6, 12, or even 18 months later.

So this is just a reminder:

• Have a plan.

• Know your risk.

• And be aware of your emotions.

The market loves to use hype and FOMO against inexperienced investors.

Why One of the Greatest Traders Wrote a Psychology Book

Ed Seykota was one of the first great systematic trend-following traders.

He was profiled in Market Wizards.

He helped pioneer computerized trading systems and took a small client account from around $5,000 into more than $15 million.

So you would think the one book he wrote about trading would be packed with entries, exits, indicators, formulas, and tactics.

It wasn’t.

The Trading Tribeis mostly about trading psychology.

That should stop every serious trader in their tracks.

Because Seykota already knew what most traders learn the hard way:

The strategy is usually not the biggest problem.

You are.

If you are brand new, yes, you still need to study. You need a real strategy, a real edge, risk management, position sizing, entries, stops, exits, and enough screen time to know what you are doing.

But if you already have rules...

If you already know where your stop goes...

If you already know you should not chase...

If you already know you should cut the loss...

If you already know you should let the winner work...

And you still keep breaking your own rules?

Then your problem is probably not the market.

It is probably not the chart.

It is probably you.

That is why The Trading Tribe matters.

It is not a magic indicator book.

It is not a secret system book.

It is about the emotions and internal drama that cause traders to abandon good systems at the worst possible time.

Hope.

Fear.

Greed.

Despair.

The same emotions that make traders exit good trades too early, enter bad trades too late, move stops, oversize, hesitate, revenge trade, and turn a trading plan into an emotional negotiation.

That is where the real damage happens.

A trader can have a profitable system and still lose money if he cannot follow it.

A trader can know the right thing to do and still fail if he cannot execute under pressure.

A trader can study every setup in the world and still destroy his account if he keeps acting out his emotions in the market.

So here is the challenge:

Study yourself as much as you study charts.

• Why do you move your stop?

• Why do you sell too early?

• Why do you hesitate?

• Why do you chase?

• Why do you need to be right?

• Why can’t you take a small loss?

• Why do you abandon your plan the second the market makes you uncomfortable?

At some point, the next level is not another indicator.

It is not another setup.

It is not another video.

It is learning how to get out of your own way.

That is where most traders are stuck.

And that is why one of the greatest systematic traders of all time wrote a trading book that was essentially all psychology.

It’s Not Enough to Just Work

William O’Neil wrote in How to Make Money in Stocks:

“Today it’s not enough for you to just work and earn a salary. To do the things you want to do, go where you want to go, and have the things you want to have in your life, you must save and invest intelligently. The income from your investments and net gains you can make will, in time, let you reach your goals and provide you real security.”

I believe that is still 100% true today.

Working hard matters.

Having a job matters.

Earning a steady income matters.

But if your entire financial future depends only on your paycheck, you are always one step away from someone else having too much control over your life.

That is the part most people do not want to hear.

A salary can help you survive.

But saving, investing, building skills, starting something of your own, or learning how to put capital to work is what can change your future.

This does not mean everyone needs to become a full-time trader.

It does not mean everyone needs to start a business tomorrow.

But it does mean you need to stop thinking your job alone is the plan.

Your job can be the income source.

But what you do with that income is what determines whether you build freedom or stay stuck.

You have to learn.

You have to save.

You have to invest.

You have to build skills that make you more valuable.

You have to take responsibility for your own financial future.

Nobody is coming to save you.

Not the government.

Not your employer.

Not the economy.

And not the perfect time.

There will always be problems.

There will always be reasons to wait.

There will always be some crisis, some fear, some excuse, or some reason why now does not feel like the right time.

But opportunity still exists.

The question is whether you are willing to prepare yourself to take advantage of it.

That is why I believe O’Neil’s message still matters today.

It is not enough to just work.

You have to invest intelligently.

You have to invest in yourself.

And you have to start before you feel ready.

Trading is one of the easiest hard things.

Like I’ve said before, trading is not rocket science.

The concepts are not that complicated. Cut your losses. Let your winners run. Trade with the trend. Manage risk. Focus on quality setups. Follow your rules.

Simple does not mean easy.

Statistically, most people still cannot do it because trading requires strength in multiple areas at the same time. You cannot just be good at finding stocks. You also have to manage risk. You cannot just build a great system. You also have to manage your emotions well enough to actually follow it.

That is where most traders break down.

They do not fail because the market is impossible to understand. They fail because they cannot stay disciplined long enough for their edge to play out.

And honestly, there are easier ways to make money in this world.

Making money from trading is great, but over time I think many serious traders realize the money is not the only reward. The challenge itself becomes part of the reward.

If trading were easy, I probably would not be as drawn to it.

I think a lot of good traders get into this game for the money, but eventually realize trading becomes something deeper. It forces you to become more disciplined, more patient, more self-aware, and more honest with yourself.

To become a better trader, you usually have to become a stronger person.

That is what makes the game so hard.

And that is also what makes it so rewarding.

One of the BEST Trading Quotes of ALL TIME

Mark Weinstein said:

“Although the cheetah is the fastest animal in the world and can catch any animal on the plains, it will wait until it is absolutely sure it can catch its prey. It may hide in the bush for a week, waiting for just the right moment. It will wait for a baby antelope, and not just any baby antelope, but preferably one that is also sick or lame. Only then, when there is no chance it can lose its prey, does it attack. That, to me, is the epitome of professional trading.”

Be like the cheetah.

Losses Are Tuition, Not Failure

Tom Basso said:

“I realized that every time I had a loss, I needed to learn something from the experience and view the loss as tuition at the College of Trading. As long as you learn something from a loss, it’s not really a loss.”

That is one of the best ways to think about trading.

Losses are part of the business. You are not going to avoid them. The goal is not to never be wrong. The goal is to make sure every loss gives you information.

• Was the setup poor?

• Was your position size too large?

• Did you ignore your stop?

• Did you buy too extended?

• Did you trade in the wrong market environment?

• Did you follow your plan and simply take a normal loss?

If losses are inevitable, at least gain something from them.

A disciplined loss that follows your process is just the cost of doing business. An undisciplined loss is tuition and an opportunity to learn something.

The real danger is not losing money on a trade.

The real danger is paying tuition over and over again and never learning the lesson.

That’s why I track mistakes inside the trade journal tool in the Momentum Trading Strategy Web App. The goal is not just to record trades. The goal is to identify patterns in your own behavior so the same mistake does not keep showing up again and again.

The real issue is not losing money on a trade.

The real issue is paying tuition over and over again and never learning the lesson. Start tracking your mistakes like we do inside the trade journal tool in the Momentum Trading Strategy Web App.

The Goal Was Never More Money. It Was Random Wednesdays.

My daughter told me she’s been wanting to go to the beach.

My kids work hard. They’re great kids. So today, on a random Wednesday, we went.

That’s the part most people miss.

The goal was never just to make more money.

The goal was to have more control over your time.

To say yes when your kid asks to go somewhere.

To not need permission to step away.

To build a life where a random Wednesday can become a memory instead of just another day on the calendar.

You can make plenty of money on the left side of the quadrant as an employee or self-employed person.

But the right side is different.

Business ownership and investing can give you something money alone does not always give you:

freedom, leverage, and flexibility.

Not looking rich.

Not sounding successful.

Not impressing strangers online.

The real goal is being able to take your kids to the beach on a random Wednesday.

Do You Want to Feel Good, or Do You Want to Get Better?

I’m not here to make you feel good about bad habits.

There are plenty of people who will tell you what you want to hear.

That’s not what I’m here to do.

I’m here if you actually want to learn how to trade growth stocks and trade momentum.

Now, the one thing I will tell you that has some feel-good to it is this:

I genuinely believe you can do this.

If you want it bad enough and you are willing to put in the work, you can do it.

But I am not going to sell you a fantasy and make it sound easy. I am not going to tell you that you are going to get rich overnight.

And honestly, if you ever see someone promising that, you should probably run the other direction, because it is likely nonsense.

But with enough hard work, time, and commitment, you can learn this.

This is not rocket science.

It does not require some rare natural talent.

But it does require work. It requires discipline. It requires studying the right process and being honest with yourself.

So the question is simple:

Do you want to feel good?

Or do you want to actually learn something?

“This Time Is Different” Is Usually the Most Expensive Phrase in Markets

I’m sorry to tell you, but when someone says, “this time is different,” the odds are usually against them.

Most of the time, it is not different.

If you think it is, you just have not been in this game long enough to realize it yet.

Trading Has Always Been a Study of Human Nature

Bernard Baruch was one of the great old Wall Street operators.

He made a fortune in the market, became known as a Wall Street legend, and later advised presidents.

But one of his best lessons still applies today:

“Above all else, in other words, the stock market is people. It is people trying to read the future.”

That was true 100 years ago.

It is still true today.

The tools changed. The speed changed. The tickers changed. The platforms changed.

But fear, greed, hope, ego, impatience, and crowd behavior did not.

That is why the same mistakes keep repeating.

Baruch also wrote:

“One could say that my whole career in Wall Street proved one long process of education in human nature.”

That is still trading.

The market may look different.

But the game is still people trying to read the future.

Winning Somewhere Else Doesn’t Automatically Make You a Winning Trader

“Yes, the winning traders have usually been winning at whatever field they are in for years.” — Ed Seykota

I agree with this.

BUT I also think it needs context.

People who have already won in other areas often bring traits that matter in trading: grit, resilience, work ethic, discipline, focus, the ability to learn from failure, and the willingness to keep improving after mistakes.

If they bring those same traits into the market, they have a real shot.

But I’ve also seen plenty of highly successful people come into trading and do horribly.

Doctors. Business owners. Executives. People who have built and sold companies.

The problem is not that they were not capable. The problem is that many of them assumed trading would be easy because they had already succeeded somewhere else.

They did not bring the same humility, work ethic, study, repetition, and respect for the craft that made them successful in their original field.

And trading punishes that fast.

In some cases, they were not really here to master trading. They were here for the thrill. The action. The dopamine. The feeling of being right. At that point, trading becomes less like a craft and more like gambling.

That almost always ends the same way.

At the same time, some of the greatest traders were not necessarily viewed as major winners before they found the market.

Mark Minervini has talked openly about being a high school dropout and struggling for years before he became successful. What changed was not some magic indicator. It was obsession with the craft, a willingness to study winners, admit mistakes, control risk, and keep refining his process.

Kristjan Kullamägi was a college student working as a security guard. Nothing fancy. Nothing spectacular on the surface. But he dedicated himself to learning the game, studied traders like William O’Neil, put in the reps, and eventually became wildly successful.

So I think the real lesson is this:

You do not need to already be a “winner” in some impressive outside field to become a great trader.

But you do need the traits that winners usually have.

• Discipline.

• Humility.

• Resilience.

• Passion.

• Focus.

• Emotional Control and Awareness.

• Work ethic.

The ability to study, fail, review, adapt, and keep going.

Trading does not care what you did before.

It only cares whether you are willing to approach it like a craft.

The Indicator Rabbit Hole Is Really a Certainty Trap

When I first started trading, I went down the indicator rabbit hole.

I started with price, volume, and a few moving averages.

Then I found one indicator.

Then another.

Then another.

Before long, I had so many indicators on my chart that I could barely see price.

And the funny thing is, after all of that searching, testing, tweaking, and chasing, I eventually ended up right back where I started:

Price.

Volume.

A few moving averages.

In Market Wizards, Larry Hite was asked if there were any technical indicators he found overrated. His answer:

“Overbought/oversold indicators. None of them seem to prove out in testing.”

William O’Neil made a similar point when he said:

“I rarely pay any attention to overbought/oversold indicators.”

Jason Shapiro has said:

“There has never been and will never be a perfect indicator.”

That is the part most traders do not want to accept.

There is no perfect indicator.

There is no magic setting.

There is no tool that removes uncertainty from the market.

Once you truly learn to read supply and demand, you realize most of what matters can be seen through price and volume. Almost every other indicator is just a derivative of those two things.

That does not mean indicators are useless. Some great traders use them. Some have built specific indicators that help them see the market more clearly.

But most of those traders still keep things simple.

They are not stacking ten different indicators on a chart hoping the perfect combination will finally give them certainty.

That is the real issue.

For many traders, the obsession with finding the next great indicator is not really about analysis.

• It is about fear.

• Fear of being wrong.

• Fear of taking a loss.

• Fear of uncertainty.

• Fear of entering without some tool giving them permission.

But the market will never give you perfect certainty. You can only build a process, manage risk, cut losses, and let your edge play out over time.

The indicator rabbit hole feels productive, but often it is just a more sophisticated way of avoiding the real work.

• Learning price.

• Understanding volume.

• Reading supply and demand.

• Building a process.

• Accepting losses.

• Managing risk.

• Executing with discipline.

That is where sustainable disciplined trading is built.

The Rules Are Not the Problem. Following Them Is.

Richard Dennis once said:

“I always say that you could publish trading rules in the newspaper and no one would follow them.”

Why do you think that is?

That quote gets to one of the most important, yet under-discussed, topics in trading: the psychology and mental side of the game.

Of course, if you do not have a trading strategy with an edge, nothing else really matters. You need a method. You need rules. You need a process.

But here is the uncomfortable truth.

There are plenty of well-known strategies with an edge. There are plenty of traders who understand setups, risk management, position sizing, and market environment.

Yet, many still cannot make money consistently.

That is exactly what Richard Dennis was getting at.

You can teach people how to trade. You can teach them rules. You can even teach them a strategy capable of making millions in the market.

The harder part is getting people to actually follow it.

• Not sabotage it.

• Not override it.

• Not move the stop.

• Not revenge trade.

• Not chase because they missed the first entry.

• Not abandon the process because one trade, one week, or one drawdown made them uncomfortable.

This is one of the biggest reasons most traders fail once they have developed enough knowledge. Beginners still need to learn the foundations, but after that, the gap is often no longer information. It is execution under pressure.

You can have all the knowledge in the world and still fail if you cannot manage your own mind.

That is what this article is about.

Read it here:

https://tradingmomentum.substack.com/p/why-most-traders-lose-even-when-they