Market Masters: Trading And The Power Of Embracing Pain

I am very often asked where the hallmark of my trading career reversal was defined. Truth be told, the pivot point was the real embracing of the pain, and the fear associated with trading losses that redirected my behavior to put me on the path of consistent and successful trading.

And as I come into my 11th year of trading the markets, I thought it would be a good idea to share my thoughts on trading losses, the pain associated with them, and why it is key to embrace them.

Embracing Pain?

Here’s the thing – most of us are pain avoidant. When we avoid embracing market pain due to our mistakes, we shield ourselves from the agent of change that pain often is for us. That avoidance creates fertile ground for repeating bad behavior over and over again, and are unable to become better performers. So even when we take a break and get away to heal and fill ourselves will positive notions, we return to bad behavior.

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As humans, we often tend to sweep our failures of thought, action, or decision behind us. It’s the reason that we tend to shut our systems down, and look away after a horrid trading day or a series of trading losses. For many months, I did this in my trading career. Making dreadful trading mistakes time after time -never revisiting them long enough for the pain from the trade to sear into my conscience.

We’re actually taught not to dwell on negative events – it disturbs our positive thinking process – it brings us down, diminishing motivation – and on and on. But there is a specific way to use positive thinking while focusing very closely on negative trading events like outsized trading losses.

Here’s a very and simple specific example of how to deal with negative feedback and turn it into fuel that creates better behavior.

You’re driving your car in the cold weather. The road looks wet ahead and you notice that the temperature is hovering near freezing. If you’ve got any sense at all, you’re going to slow down, but let’s say you lack experience and you’ve never seen the road look quite like this and you think to yourself, the guys in front of me are driving normally. So, you move right onto the frozen road, spin out of control, crash your car, get a rough bump on your head, bruise yourself up a bit, and narrowly escape hitting other cars on the interstate.

The consequences sit with you for a while – your insurance goes up, your vehicle is in the shop for a while, you spend hours in the emergency room because you got banged up in the accident, and a slurry of other things. The event burns a space into your brain (if you’re a normal human being, and not unbalanced and unnaturally reckless) – they burn a space into your memory and experience that says –(insert expletive –“I’d better be more careful next time”)

trader losing money in marketBeing forced to look at the negative feedback, and reminded of the experience will make you more careful the next time around. Over time, because we pay attention to the negative feedback and pain associated with driving poorly, we eventually become better drivers. We adapt, and we learn to be alert to change that could mean danger.

Oddly, this is not how we approach trading – we chalk a great deal up to the uncertainty of the market. But there is always uncertainty on the roads we drive, we just learn how to adapt when we perceive hazard. Ok, some of us don’t and remain horrible drivers, but we’ll pretend for this sake of example that this is not you.

So, as many of us look to the New Year for better trading results and performance, we can do a number of important things. The first of which is, of course, make sure you are trading proper mechanics that yield consistent results. More importantly, we must learn to face the discomfort and pain that poor trading and trading losses delivers.

Without this important step, we are putting off the real learning event.


1.   Sort though the entire event – 

  • Keep a journal of your trade- you must be aware of when and where you make mistakes
  • What made you take the trade
  • How much you lost
  • What you did that made it worse
  • Familiarize yourself with the experience and emotion of the event
  • Remember how bad it felt to lose
  • Resolve to eliminate the behavior that caused the pain – that means CHANGE


2.   Once you have evaluated the event

  • Avoid making negative commentary about yourself
  • Look at the behaviors that caused the trade to occur
    • Carelessness, or a lack of caution
    • Inconsistent, or inappropriate analysis
    • Poor risk assessment
  • Seek to understand what makes you take certain setups that are incorrect
    • The same mistakes point to a systemic decision failure
    • There is a reason why we make the same mistakes
    • Learn to understand yourself and what make you choose what you do
    • Work in the environment that suits you best

The fact of the matter is that many of us aren’t experienced or knowledgeable enough to understand how or why we make mistakes. That’s where a good coach comes into play – to help us through mechanical process, and help us learn to understand ourselves, and build decision making skills and trading successes.

If interested, you can Visit The Trading Vault to learn how to trade the way I do.  Thanks for reading.


Twitter:  @AnneMarieTrades

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.