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The Costly Trading Bias You May Not Know You Have

By The Lazy Trader on July 18, 2014

Reading Time: 4 minutes
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Have you ever noticed that those tired, old sayings like “Money Makes the World Go Round,” “Show Me the Money!” and “Money Is Power” are still lurking everywhere in society? It’s like they never, ever go out of style…but why not? 

Well, if anything, it’s because our natural beliefs and attitudes about money are hard-wired into our brains by family and by society from a very young age, and for traders, that can be a big, big problem.

You see, before we know it or even have a chance to decide for ourselves, money somehow automatically comes to stand for control, success, self-worth, adequacy, and who knows what else!

When carried over into the markets, this produces a potentially devastating trading bias that can cause indecision, missed opportunities, or even outright losses. Unfortunately, it’s an attitude that already lives inside most of us, and, perhaps unbeknownst to us, could be hindering consistency and profitability right now.

Here’s how to tell if you have a dangerous money-related trading bias, and more importantly, how to effectively deal with it if you do.

This Trading Bias Is All About Money

Trading biasThink about how you were brought up for a moment: was money tight? Did your parents teach you the value of a dollar and hard work?

Many traders remember distinctly what it was like living through tough economic times, downturns, banking crises, market crashes, and the like. Afterall, around the world, we’ve experienced all of these things in recent years alone. In addition, older traders among us have probably even heard firsthand accounts of the devastation present during the Great Depression and times of war.

All of these things helped to forever shape our beliefs about money, from how precious it is, to how fast it can disappear.

Consider this for even a moment and it’s not hard to see that if you bring these beliefs with you when you trade, there will be so much emotional capital riding on every dollar or tick of the market that fear, indecision, and even outright paralysis are sure to follow.

See related: 3 Ways to Overcome Fear in Trading

You can’t trade this way, not successfully and with longevity, anyway. And there’s no need to, not when “set and forget” trades—the kind that can be taken almost effortlessly, with confidence and conviction, and free from fear and emotion—are out there if you’ll only remove this costly trading bias and let them happen.

How to Tell if You Have This Trading Bias

Very simply put, there is no quicker and more effective means for identifying whether this money-inspired trading bias is impacting your thought process and trade results than by consulting your trade journal, a tool we discussed in great detail here.

See recent: Must-Have Components of Every Trade Journal

As you carefully analyze the data in your trade journal, are you seeing repeated notes like “Was afraid to pull the trigger,” “Waited too long for more confirmation,” or even “Fear got in the way”? If so, there’s a harmful pattern there, and it would certainly seem that the cause could be this commonly undiagnosed trading bias at work.

Ask yourself with extreme objectivity, “Am I simply afraid of losing money?” and if the answer is “Yes,” then the problem is rather clear. Accept it, and whatever you do, don’t panic, because this is one problem that has a clear and viable solution.

Trading biasAnd How to Beat This Trading Bias

It seems strange and all-too-simple to say “Just forget about the money,” doesn’t it? Afterall, that’s why we trade in the first place. But while making money is the ultimate goal, trading itself isn’t about the money; it’s about the careful and exacting execution of your trading strategy, and that’s where all your focus should be.

This particular trading bias is destructive because it diverts focus away from the actual process and toward the end results. Even more, it causes traders to fixate on “not losing moneyrather than doing what their strategy requires in order to make money. See the difference?

In addition, the fear of losing is often so strong that traders forget about the safety net designed to guard against that in the first place. Risk management components exist for a reason, right? So if ever you find yourself fearful or simply “trying not to lose,” identify and acknowledge that this trading bias is creeping in, and focus on the methods, not the money. The end results will take care of themselves.


This is not one of those articles that try to tell you to forget about losses, or even worse, “embrace” them. Losing money sucks, it’s as simple as that, but the point here is that we’re all human beings who are naturally programmed with certain beliefs and biases about money that may not be beneficial to trading success.

At least check and see if this particular trading bias is affecting you, and if so, rest easy, because truthfully, there are more serious problems out there, and this one probably isn’t your fault, anyway. For many of us, it’s who we are and who we’ve been brought up to be, and while that’s just fine, it’s important to block out strong feelings about money whenever we’re going to work in the markets.

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The Lazy Trader

The Lazy Trader is a publishing brand dedicated putting the fun back into finance, presenting powerful wealth creation strategies for a better world.


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The Lazy Trader

The Lazy Trader is a publishing brand dedicated putting the fun back into finance, presenting powerful wealth creation strategies for a better world.

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