52 Trading Taboos: Lessons Every Trader Should Learn from Painful Experiences

2025.03.17

52 Trading Taboos: Lessons Every Trader Should Learn from Painful Experiences

Never break your trading rules or deviate from your plan when emotionally charged.

2025.03.17 - 08:47:53

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Never break your trading rules or deviate from your plan when emotionally charged.

Author: kel xyz

Translation: TechFlow

Never over-leverage. Once your position is too large, your rationality will be consumed by emotion. Even if your judgment is correct, over-leveraging leading to liquidation is the fastest path to destruction.
Never trade when exhausted or sleep-deprived. Decision fatigue destroys traders more effectively than liquidation.
Never trade without a clear edge. A trade without a defined advantage is merely gambling with extra steps. If you can't explain your edge in one sentence, you likely don't have one.
Never open a position out of boredom. The urge to "do something" often leads to suboptimal returns. Often, doing nothing is the best choice. If you find yourself entering trades just to "stay busy" or because "it's been a while since I traded," reflect. Trading for the sake of action leads only to rash decisions and losses. The market doesn't reward the "most active trader"—only the "most profitable trader." Sometimes, the best trade is no trade.
Never trade immediately after a big loss. You're prone to emotional decisions, trying to recover everything through reckless bets. Attempting to recoup all losses at once guarantees even greater losses.
Never enter a position without an exit plan. Whether time-based stop-loss, price stop-loss, invalidation point, or event-driven exit, define it before entry. Remember, the last objective moment is before you place your order. Once in a position, admitting error becomes difficult—so decide your stop-loss in advance.
Never become emotionally attached to your position. The market doesn't care about your beliefs. Either cut your losses, or get eliminated by the market.
Never trade your PNL—trade the market itself. Obsessing over losses or past gains clouds judgment and distorts execution.
Not every opinion deserves a trade. Often, the best trade is no trade. Preserving capital and mental focus for favorable opportunities matters more than forcing entries.
Never fight the trend. The trend is stronger than you are. Adapt or get eliminated.
Never blindly catch falling knives. Cheap assets can become cheaper.
Never break your trading rules or deviate from your plan when emotionally charged. Rules exist for a reason—usually born from painful experience. When you convince yourself to "just this once" ignore a rule (e.g., moving stops, adding to positions, or over-leveraging), you open the door to chaos. Discipline means doing the right thing even when it's hard. As a trading maxim goes: Plan your trade, trade your plan.
Never use all your ammunition at once.
Never trade beyond your comfort zone. If the position is too large, fear-driven decisions begin—you may believe the market or others are targeting you, even seeing non-existent "ghosts." Adjust position size based on how well you sleep at night.
Never let pride prevent you from exiting a bad trade. Admit you were wrong—cut, reset, and move on.
Never underestimate reflexivity in markets. Strength can grow stronger; weakness can grow weaker.
Never assume liquidity will always be there. Exits are always smaller than you think. Liquidity isn’t yours to decide—it’s determined by the market.
Never mistake randomness for strategy. Buying because prices rose, or shorting because it "feels high," isn't trading—it's blind gambling. Even with good risk management, if your entry lacks rationale, you'll eventually bleed out.
Never repeat the same mistake twice. Mistakes in trading are inevitable, but repeating them is unacceptable. You must never lose the same way twice.
Never forget defense. Making mistakes is acceptable; making repeated ones isn’t. Capital preservation is paramount. "Don't focus on making money; focus on protecting what you have."
Never focus solely on offense. Survival trumps everything. If you don’t bet, you can’t win. But if you lose all your chips, you can’t bet at all.
Never inflate your lifestyle after a big win. Problems begin when you start projecting annual income based on a single lucky trade.
Never forget to shift to defense after a hot streak. Big losses often follow winning streaks, when overconfidence creeps in. Look inward—your last big trade meant nothing to the market.
Never let pride, ego, or overconfidence take over. Stay humble always.
Never trade when you lack control. For example, during Federal Reserve meetings (FOMC events).
Never become complacent. A strategy effective in one market environment may fail in another. Trading is a craft requiring constant improvement. Comfort is often the enemy of profitability. Don’t assume you know where the market is headed. As a famous quote says: “We have two kinds of forecasters: those who don’t know, and those who don’t know they don’t know.” Never assume your edge is permanent. Markets evolve, edges disappear, and strategies that worked in the last cycle may be useless in the next. Keep optimizing, keep testing—stagnation is death.
Never keep adding to a losing position after your thesis has been disproven.
Never trade with “certainty”—trade with “conviction.”
Never assume the market “must” do something, especially based on recent patterns. The market owes you no logic or continuity. Just because it has recently risen (or fallen) doesn’t mean it won’t reverse suddenly. Avoid words like “definitely” or “impossible” in trading. Stay flexible—anything can happen. Remind yourself: never say “impossible” about market behavior.
Never treat win rate as everything. Maximizing win rate for emotional comfort is a trap. Taking profits too early or avoiding necessary small losses ultimately harms profitability.
Never underestimate discipline, patience, risk control, and execution—don’t rely solely on alpha. Many traders possess solid alpha strategies but fail to apply them correctly. Good execution includes not just what and how to trade, but also when not to trade. Sometimes, the best execution decision is no trade—especially when conditions aren’t favorable. Always ask yourself: “Do I have an edge here, or am I just flipping a coin?” If the latter, save your capital for better opportunities.
Never collapse after a big loss or become overly excited after a big win. Emotional resilience is a trader’s greatest asset.
Never ignore price action after news. If the market reacts opposite to your expectation, exit immediately. The market is telling you something you missed.
Never trade based on someone else’s belief. If you buy on someone else’s advice, you’ll need them to tell you when to exit—and when they go silent, you’re stuck. As Livermore said: “No one ever made a fortune by taking other people’s advice.” Hone your own skills, build your own system. If you can’t trust your own decisions, you’re just a pawn in someone else’s game.
Never ignore your gut instinct. If it feels wrong, it usually is.
Never try to catch every market move. Attempting to capture every up and down is foolish. Always view the market from abundance, not scarcity—the market will always exist, and there will always be enough opportunities to profit. You don’t need to act every time.
Never underestimate the power of failure. Early failures and repeated losses (while staying in the game) are the secret to becoming better.
Never hold onto a losing position after your trading logic has been invalidated, especially following a sharp decline. The mindset of “I’ve lost too much to sell now” will wipe you out completely.
Never let “getting back to even” dominate your decisions. This mindset leads to overtrading and ultimately blows up your account.
Never focus only on entry points. A trade isn’t complete until you exit. Knowing when to close is as important as knowing when to open.
Never ignore the “boring” parts (position sizing, stop-losses, risk/reward ratio)—these are what keep you alive in the market. Don’t wait for a catastrophic loss to learn this lesson.
Never trade for the adrenaline rush. The goal of trading is to win—not to seek excitement.
Never fall for the illusion of “superficial strength”—such strength is often just a lagging reflection of reality.
Never stay in or enter a position out of “hope” or wishful thinking.
Never underestimate the importance of risk management. Prioritize capital protection over profit chasing. “Take care of your losses, and your profits will take care of themselves.”
Never recklessly open or close positions. Just as you scale into positions, you should scale out—going “all in, all out” is a recipe for disaster.
Never make a trade you can’t afford to lose. No single trade should be large enough to knock you out of the game. “The most important rule is never to let a loss get out of control.” You should be able to endure 20 or 30 consecutive losing trades and still retain sufficient capital. Never let a single position jeopardize your trading career.
Never trade without an edge. If you don’t have an edge, step aside. Forcing trades outside your framework only erodes your account.
Never assume your edge is permanent. Markets evolve, edges disappear, and strategies that worked in the last cycle may be useless in the next. Keep optimizing, keep testing—stagnation is death.
Never judge a trade solely by its outcome. Good trades sometimes lose money; bad trades can get lucky. Focus on execution, not results.
Never hold a position out of fear of looking foolish or due to public opinion. I've seen many traders die prematurely because they feared public humiliation. Cut without hesitation. The market doesn’t care about your ego—and neither should you.
Never underestimate the power of stepping away. If you're on a losing streak, close your positions and take a break. Psychological capital is as important as financial capital. The key is breaking the spiral of negative emotions.