Two Trading Mistakes That Can Destroy Your Account
In our previous lesson on learning from trading losses, we explored how social expectations influence the way traders perceive success and failure.
In this article, we will focus on two common trading mistakes that even intelligent and disciplined traders make. These mistakes are deeply rooted in human psychology and can silently destroy your trading account if left unchecked.
Mistake #1: Holding Losing Trades Because You Want to Be Right
One of the most destructive mistakes in trading is holding onto losing trades simply because you believe your analysis is correct.
A famous historical example is the NASDAQ bubble in 1999 and early 2000. Many experienced traders correctly identified that the market was overvalued and started shorting the index. Eventually, they were proven right when the market crashed. However, the market continued rising much longer than expected, causing huge losses for traders who refused to exit their positions.
Humans naturally want to be right. This psychological bias often forces traders to stay in losing trades even when the market clearly proves them wrong. In trading, being right too early can be just as dangerous as being wrong.
The key lesson:
Cut your losses quickly. The market can stay irrational longer than you can stay solvent.
Mistake #2: Abandoning Your Trading Plan Too Quickly
Another common mistake is changing your trading strategy out of frustration or fear of missing opportunities.
Many traders start with a well-tested trading system and commit to following it. However, after experiencing losing trades or missing market moves, they begin to doubt the strategy and deviate from the original plan.
Every trading system goes through losing streaks and drawdowns. This is normal. A strategy with fewer losing trades is not necessarily better than one with more losses. What matters most is:
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Understanding the system’s characteristics
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Knowing the win–loss ratio
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Applying proper risk and money management
If your strategy has been tested and proven profitable over the long term, there is no reason to abandon it after a few losses. Constantly switching strategies will only keep you from developing consistency and discipline.
The key lesson:
Stick to your trading plan unless long-term data proves it no longer works.
Why These Two Mistakes Are So Dangerous
These two mistakes are connected by one thing: emotions.
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Holding losing trades is driven by ego and the desire to be right.
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Changing strategies too quickly is driven by fear, impatience, and FOMO.
Together, they can create a cycle of emotional trading that leads to account destruction.
How to Avoid These Trading Mistakes
To protect your trading account, you should:
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Always use Stop Loss
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Follow a written trading plan
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Accept losses as part of trading
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Track your performance with a trading journal
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Evaluate strategies over a large sample size
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Focus on discipline, not prediction
