In This Week’s Trading Psychology Series: The Ego Trap
8/28/2025, 1:59:04 PM
When the market humbles you, do you adapt or spiral? This blog uncovers the psychological trap of ego and how rewiring your mindset can transform your results.
The price breaks support. Your setup fails. Your stop loss is right there… but instead of taking the hit, you tell yourself: "It'll bounce. Just wait. The market's wrong, not me."
You hold on, hoping the market will change. Minutes later, your account's bleeding. And still, you don't close!
This isn't trading anymore. This is ego in action.
In this week's Trading Psychology Series, our Trading Psychology Coach, Paulina, unmasked one of the most destructive forces in trading: the refusal to admit when we're wrong. Not because of faulty strategies or bad luck. But because of identity. Because losing feels like we failed, not just the trade.
Trading on Ego Isn't Confidence. It's a Gamble
Ego is seductive. It sounds like self-belief. It feels like conviction. But it leads to stubbornness, overtrading, and blown accounts. Because ego doesn't want to be wrong; it wants to win.
And what ought to be right makes us hold losing trades longer than we should, move stops, ignore data, and chase setups we never planned for. Let’s break it down with two archetypes:
Trader A: Clings to their position, believing their self-worth is tied to being right. They refuse to close the trade, digging deeper as losses mount.
Trader B: Cuts losses without a second thought. They reflect, journal the experience, and emerge with newfound wisdom.
Same market, same trade, starkly different approaches and outcomes.
Learning from the Ring
Trading on ego is like a boxer who refuses to defend himself, even as he’s taking heavy blows. The crowd sees him spiralling, but he’s too proud to step back. Eventually, he gets knocked out.
The disciplined boxer, however? He absorbs the hit, steps back, re-centres, and survives to fight another round.
Admitting you're wrong doesn’t indicate weakness. It’s a savvy strategy, a protective measure ensuring your survival in the game. A well-timed retreat can save you for the next opportunity.
Transforming Identity Through Loss
Here’s an eye-opener: most traders falter not due to a lack of skill but because their ego hijacks their ability to learn from losses.
Neuroscience shows we are hardwired to hate being wrong; loss aversion can be twice as painful as the pleasure of a win. But here’s the silver lining: your brain can be retrained.
Rewire Your Response
Engage in practices like repetition, journaling, and self-reflection. Stop personalizing losses. Start viewing them as valuable feedback.
This mindset change doesn’t just improve your results - it transforms your entire trading identity.
Moreover, you evolve from a trader desperate to prove you're right into one dedicated to doing what’s right.
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A huge thank you to everyone who joined our livestreams - you make every session more engaging with your energy, questions, and insights. Be sure to like this video and subscribe to our YouTube channel so you never miss upcoming giveaways, market breakdowns, and trading psychology sessions.
