Trading comes along with experiences and emotions that most people feel as pain. Think about the pain of losing money, the pain of feeling like you missed out, the pain of doubting about the wrong trading decisions, and the pain of laying awake all night worrying about your investments and trades (second-guessing). Every single trader deals with these situations or has dealt with them in the past, in this article we’ll dive into how you can eliminate the pain and become more successful.

Topics:
- Why can trading be so painful?
- How can a trader eliminate this pain
- Bitcoin correction use-case

Why do traders Feel Pain?

Traders experience emotional pain because they often operate with fear, uncertainty, and unrealistic expectations. This emotional discomfort comes from focusing on outcomes they can't control, like market movements, instead of maintaining discipline and consistency in their trading process. Emotional pain comes when traders are attached to results rather than managing their mindset and risk effectively.

In simple terms: Traders who expect the market to do as they please, will experience pain.

This is a loop that keeps most traders stuck in fear and uncertainty. They want to have a certain control over the markets, this would be the same logic as expecting a sunny day, while it rains. You can’t change it, you either accept it or build resistance.

The traders who can view the markets as neutral, and unbiased, and can accept the risk of getting in and getting out of the market are the ones who become successful. They’ve learned that their opinion or expectations don’t move the market, but that they accepted the market as an ocean full of waves and decided to take the waves as they come, not as how they want them to come.

The book “Trading in the Zone“ by Mark Douglas goes deeper into the psychological pitfalls of traders.

How can a trader accept this reality?

Short answer: By accepting the risk of every trade and taking full responsibility.

Think about it, if you have a trading strategy that wins 6 out of 10 trades. You are going to lose 4 of the 10 trades that you make. This means that losing is an unavoidable situation in your life. If you can’t handle your losses, or you blame the market it, executing this trading strategy will be immensely difficult even though there is nothing wrong with the strategy. It’s difficult because you haven’t accepted the real risk associated with your strategy.

Winning is so simple yet so few can do it

The reason why winning is simple is, that whenever you have a profitable trading strategy, the only thing you need to do is to execute it correctly, without or with very limited emotions.

The reason why few people can do this is because they either are being influenced by their fear or euphoria. Both are detrimental to their long-term success. Scared or overconfident. Remember, the market is neutral.

Bitcoin use-case: the last correction

One of the best tricks you can use to separate yourself from the herd is to compare your emotional state with the emotional state of the markets.

Most traders look at their chart indicators but don’t realize that their emotional state is coloring their judgment. This is called confirmation bias.

Let’s have a look at the latest correction in Bitcoin:

It’s a small correction on the daily timeframe, but for day traders this is a big move most want to take advantage of. How could one forecast that this could potentially happen?
Let’s have a look at the data picture.

If we look at the image above we can see that in terms of probabilities the chances are higher for a correction, rather than more upside in the short-term. The main reasons are:

- Sentiment has been optimistic for quite a while
- Momentum indicators are overbought (some might show bearish divergences)
- Selling pressure is present

Now comes the catch, this data profile shows that the probability for downside is higher than more upside short-term, but that does not mean that it has to come down.

We might be only right 6 out of 10 times, remember? So that means that even though we are on the right side of the coin, we will be proven wrong sometimes as this is part of accepting the risk of probabilities. It only means that we have chosen to ride the wave of the market in the most probable direction.

And now it’s time to wait until we find ourselves in a situation where the probabilities for more upside are increasing. Then when that situation presents itself, it’s our call whether we want to act on it as traders and take advantage of our edge in the market.