How to Break Bad Trading Habits – and How to Form New Trading Habits

How much do your trading habits affect your trading performance?

We are all creatures of habit—that how it’s humanly possible to navigate the complexity of life without a complete breakdown.

But, it is easy to get stuck in a pipe doing the same things over and over again.

The nature of the markets make it so easy to form bad trading habits;

  • A losing trade can quickly turn to profit
  • Revenge trading can easily make you money
  • Overtrading can be profitable

And so, it is easy for a trader to keep doing the same wrong things because there is a fair chance that they will come on the green.

But that’s a trap. You only need to one losing trade to blow an account.

So as much as there is a fair chance that removing a stop loss will make you money, it will, at one point, bury you.

If we seek consistent profits, we have to root out bad trading habits that siphon money and practice good trading habits successful traders exhibit.

What are habits?

The American Journal of Psychology defines a habit as a more or less fixed way of thinking, willing, or feeling acquired through previous repetition of a mental experience.

Habit is the way consciousness runs its course when we experience familiar processes.

In other words, habits are routine behaviors that tend to occur subconsciously.

How to break bad trading habits and form good trading habits

Breaking bad trading habits and in the process forming good trading habits involves the neural modifications of tendencies.

Somehow, you have to get your subconscious to help form good trading habits.

Let not the big words throw you off balance.

To form good trading habits, three things need to work in rhythm.

Trigger. Action. Reward. (TAR)


A trigger is an event that causes an automatic reaction. What drives you to use 10x leverage? Maybe you just lost a trade or some pressure to make money?


The activity that you do – move a stop loss, over-leverage an account, over trade, miss a trade.


Train the mind to know there is a reward for completing an action. Followed your trade rules during the week? Go

To break bad habits, you need to identify the bad habits that plague you and find the triggers – this is where a trading journal comes in handy. If you don’t know the bad habits you have and what feeds them, you will never form good trading habits.

When you’ve identified your TAR, you need to create

The four conditions that favor the development of habits.

Repetition, attention, the intensity of the experience, and plasticity of the nervous system.

Repetition – habits are formed by doing the same things over and over again.

Attention – to form good trading habits or break bad ones, you need to be aware of when the triggers manifest. Mindfulness practice will help you here.

The intensity of the experience – the intensity of the actions/ trading experiences are critical to forming good trading habits. Rigorously working through every trading action or decision will help you develop good trading habits.

Plasticity of the nervous systemNeural plasticity is the ability of the nervous system to change. Dr. Kim and Dr Hil do a good job breaking down how to Change Your Brain & Habits with Neural Plasticity.

So now that you have your TARs and the conditions necessary to break bad trading habits and to form good trading habits what next?

Start Small – so small that you can’t fail.

Forming new habits is hard. Trying to accomplish much in a short time is a setup for failure.

The idea is to start so small that you won’t talk yourself out of the activity.

For instance, if the desire is to form the habit of regularly keeping a trading journal.

You don’t start by trying to implement all the recommendations of keeping a trading journal.

You don’t have to take screenshots of your trades today. Neither do you have to write down what’s running in your mind.

Start by doing a simple thing as just firing up your trading journal application.

If you are using excel, launch Excel and stare at the spreadsheet.

If it a book, open the page. Keep doing it until the day you will look dumb for just opening your journal without actually noting something.

That’s so simple, right.

Progressively add tasks.

The next week or month, record the date.

The next record the date and the currency pair you traded

Next, add the strategy.

On and on, you add until keeping a trading journal is no longer a chore.

Every other day or week, you make the tasks so easy to do.

It is okay to fail – don’t focus on the result, focus on the process.

You skipped adding an entry to your journal. So what?

You broke a rule and doubled your lot size. So what?

So, do you give up altogether because developing good trading habits feel like you’re waging war with the whole world?

The truth, though, is there is a battle going on within you.

What you should know is that you won’t win every battle, it is okay to fail.

But decide to get up every other time you slack back.

Don’t focus on the result; concentrate on showing up every trading day to do the simple things you need to do.

The result, a disciplined and successful trader, is a product of daily hemming at the good trading habits of successful traders.


You may have learned bad trading habits unknowingly, breaking them and form good trading habits will require you to muscle the strength that I know is in you to consciously show up and on just one right thing, every day.

It is scary and quite honestly hard at the beginning, but it is doable.

If you need to take time off your trading desk, do.  There more to life than candlesticks.

Keep a journal, engage, and surround yourself with successful traders to learn from their experiences.

Now, go  break those bad trading habits.