Why Traders Self-Sabotage and How to Break the Cycle
What to Do When Your Mind Works Against Your Goals
When we hold conflicting beliefs, values, or attitudes, it creates a mental tension called cognitive dissonance. This discomfort pushes us to resolve it by either changing our beliefs or justifying our actions.
And yeah, you guessed it, justifying actions is usually the go-to.
Self-justification becomes the quick fix for easing that discomfort. We’ve all done it.
“I didn’t want to miss that trade; that’s why I jumped in.”
“I didn’t want to lose out on profits again, so I took them earlier.”
We convince ourselves that our actions have a logical basis to protect our egos.
True accountability starts by recognizing the distortion in this rationalization.
Why Our Brains Judge Instantly (And How It Impacts Trading)
We hold beliefs about everything we’ve observed.
The guy riding a bike across the road? We have a judgment for him.
The woman in line at the supermarket? We notice her outfit and think something about it.
And hey, don’t feel bad about this! It’s an instinctive process—as natural as breathing.
But the strength of that judgment depends on our personal experiences. The cyclist might not evoke much, unless you’ve been in a bike accident before. The woman in line? She’s neutral too, until, say, she’s wearing an outlandishly loud shirt — now, that’s an image that’ll spark some judgment.
Here’s the point: even the smallest visual cue gets judged, thanks to our brain’s natural perceptual process. It’s how we create predictability and safety from a limbic point of view.
This being said, problems don’t come from these minor judgments or soft beliefs; they usually come from strong-held beliefs tied to identity.
Take the woman’s shirt. Sure, it might be ugly, but it’s not threatening your sense of self. Now, imagine you start a small argument with that woman, and she accuses you of being rude for skipping the line. You’d probably snap back — now it’s about defending your identity.
In trading, the market constantly throws us accusations, too, which triggers our need to defend ourselves. Most performance flaws happen in this defensive process that causes us to either:
Attack — as seen in revenge trading
Escape — by exiting positions too early
Freeze — by hesitating and missing entries
(I wrote more on the four fear responses here)
But what happens when this conflict is internal — when it’s you versus…you?
Just like any discordance in our brains, it will be solved. “How” is the nuance…
Sometimes, the new learning about the markets conflicts with our pre-existing beliefs. The way the brain solves this conflict, however, is not always productive with what we want.
You might know respecting your trading rules is the path to success, but you might also believe that inaction equals incompetence. Then, in a slow market with no setups, doing nothing feels so intolerable that you end up making an impulsive trade. Game over: the ego wins; your long-term goals lose.
The truth is: Your brain will keep on favoring the identity-based beliefs over newer ones you know you should follow. This is the source of the knowing-doing gap. And it’s frustrating.
To close this gap, you must shift the new belief to an identity level.
So, how do we work through this?
The first step is to confront the conflict consciously. Don’t leave it up to your brain’s autopilot — it’ll go for the path of least resistance.
Choose to engage the part of your brain that’s goal-oriented and focused on what matters — the prefrontal cortex.
I’ve worked with many traders on reshaping beliefs at this level, and I’ve seen the same problematic conflicts emerge again and again. This creates loops of self-sabotage.
I’m going to share the most common ones I’ve seen and walk you through a process to find alignment — one that supports your trading goals rather than your impulsive instincts.