Know Your Triggers

After 26  years of trading, I can tell you this: most trading losses are not caused by bad strategies. They’re caused by your decision making. In other words, traders break their rules when certain emotional triggers are activated. For example: 

• Fatigue.
• Boredom.
• Revenge after a loss.
• Overconfidence after a win.

If you don’t identify your personal triggers (we all have different ones), you’ll eventually trade your emotions instead of your edge.

The Science of Triggers

Research in behavioral finance and psychology shows that emotional arousal impairs probabilistic reasoning and increases impulsive behavior. In real-time trading experiments, studies have found that physiological stress responses were strongly correlated with deviations from risk plans.

Fatigue alone significantly reduces cognitive control and increases risk-taking errors. Boredom, meanwhile, has been shown to increase sensation-seeking behavior and impulsivity.

These findings confirm what professionals learn the hard way: Your internal state can override your trading plan. 

Example 1: Fatigue

You slept poorly. Reaction time slows. Attention narrows. You hesitate on valid entries and chase late ones. Studies show sleep deprivation impairs executive function and decision quality—especially in uncertain environments... like trading!

Solutions: Reduce position size. Limit number of trades. Or don’t trade.

Example 2: Revenge Trading

After two losses, you increase size slightly “to make it back.” Prospect Theory demonstrates that we can become risk-seeking, rather than risk averse, when losing. That’s revenge trading in mathematical form.

Solutions: Predefine a daily loss cap. Create a cooling-off period. Log emotional intensity after each loss.

This transforms emotion into data.

Example 3: Boredom Trading

Markets can be slow. You'll feel unproductive. You'll take a marginal setup. Wrong... excessive trading reduces performance, partly due to overconfidence and activity bias.

Solutions: Define “no trade” as a successful outcome. Track opportunity quality, not activity level. Schedule review work during slow periods.

The Mathematical Component

Triggers often alter:

• Position size
• Stop placement
• Trade frequency

Even a small deviation in average loss (e.g., 1R becoming 1.3R) can flip edge negative over time. Your awareness protects your edge.

The Psychological Edge

Predefining your responses to emotional triggers (“If I feel X, I will do Y”) significantly improves adherence to your trade plan. 

Examples:

• If I lose 2 trades → I stop for 30 minutes.
• If I feel urgency → I reduce size by half.
• If I feel bored → I step away.

Awareness doesn’t eliminate temptation. It diffuses it. Your system doesn’t fail first. Your discipline does. Identify your triggers. Write your responses. Respect your mental state as much as your setup.

To your trading success!

Mike Siewruk

PS: Was this advice helpful? Feel free to pass this link for a FREE membership to Trade Aptitude along to your trading buddies: thedailymarketforecast.com/signup