3 Reasons Why Feeling Invincible can Destroy Your Trading

FailureMany successful traders that I have met have been through major drawdowns at one stage in their trading career. While I don’t know the exact statistics, I know for certain that some of them were on a down hill because they were feeling over-confident about their trading. Some even went beyond that and were feeling Invincible.

Believe it or not, even I had this not-so-fortunate experience. After my first major drawdown (since I started trading), my monthly return went from breaking even to having an approximate 5% return month-on-month. This went on for a few months and I thought: “AWESOME!!! I’m ready now and this is going to be a piece of cake!!”

Well, it was that exact statement I made that turned my trading results around from profitable back to breakeven and even a few months of losses. Thankfully, I didn’t have to go through another major bad patch before I woke up again. However, the feeling of being greater than great and thinking that I was ready to conquer the world also meant that (to a certain extent) that I was feeling invincible about trading. I was so full of myself that my trading results proved to me that I was just being an amateur.

Having gone through that experience, I would like to share with you why feeling invincible can destroy your trading. More importantly, I hope that this can be a warning, to some of you reading this, to stay humble, modest and deligent at all times. Anyway, the following are 3 reasons why feeling invincible can destroy your trading.

1. Your View of the Market Becomes Skewed

When you’re feeling invincible, your view of market becomes skewed. Because you had a few good months of trading, you perceive trading as being too easy and you start to focus on the wonderful things that you can obtain from trading – as if Santa comes around every month. You’ll start looking at trading like a bank which pays a fix dividend. While trading opportunities are endless, you seem to think that the market is always kind and generous.

Because you’ve had a streak of wining trades, you think that it is possible to win all the time. Which means, the mental image on your head only shows you what you want to see and when you’re over-confidence, you only see winning trades. In other words, the worst thing that can happen has happened – your belief is that you will always be a winner.

Like having negative emotions – where you only see the worst side of trading – when you’re feeling invincible, you only see the best side of trading.

In the end, you take every trade that is available and assume that it will be a winner – even if some may not meet the rules. The feeling of being invincible continues to cloud your judgement and you will struggle to realise that you are trap.

2. Loosing the Pace

Marathon RunnersHave you seen a marathon or long distance runner pace themselves by either running at constant speed or running closely behind another runner? They usually keep that pace for a long time and only break that pace as they approach the finish line. While I’m not a runner, I know that international marathon runners need to pace themselves so that they can sustain the entire race.

If I were to flip the focus to amateur runners instead, they are the ones who runs the fastest at the start. They don’t have proper rhythm nor do they pace their race at all. They probably end up using too much energy at the beginning and they fail to maintain proper breathing techniques. As you lose energy and start to panic, your mind starts to dysfunction. When that happens, runners start losing sight of what they are doing and their focus starts to fall apart as they lose their momentum.

Do you think they can be consistent till the end? My guess is that they probably can’t. They might even need to rest a little before they walk their way to the finish line.

Feeling invincible is a somewhat similar to an amateur runner. They feel great at the start of the run and they use all their energy. However, as they reach the mid point, they start to panic because they’ve either ran out of breath or they can’t focus properly any more. Unfortunately, like running, when traders lose focus and start to walk (instead of run), it does take a lot of effort to get back into the rhythm.

So which type of runner do you want to be? Do you want to be able to sustain the race or would you prefer to speed ahead at the beginning and risk losing the focus?

3. Opportunities for Bad Habits to Breed

Trading habits are crucial for traders to maintain discipline and good trading routines. Nevertheless, feeling invincible and being over-confident are the few characteristics that will breed bad trading habits.

Think about it, once you are profitable and over-confident about trading, the chances of slacking and taking things for granted is much higher (compared to a trader who is not profitable yet). Hence, if the trader were to take the chance and become slightly less discipline, he/she might do it one time, two times and if done the third time, they will likely repeat it even in the longer term.

100 years of bad habits

Bad habits includes missing trading opportunities, skipping weekly analysis, or even forgetting their trading routines. The list goes on. These are literally the bad habits that will destroy you.

Well, breeding bad habits is probably the easy part. The real challenge starts when you want to remove bad habits. Traders forget that changing habits (without seeking professional help) is actually more difficult. Just like smoking, once you’re a smoker, it’s difficult to stop smoking without professional help. But unlike smoking, bad trading habits can be disastrous.

Also, more often than not, people would prefer not to change as they fear that any changes worsen their situation. Of course, that’s assuming that the trader realises that they have bad habits.


It’s great to be confident about yourself, trading (as a career) and your system (the rules). Unfortunately, many traders fail to see the difference between that and feeling invincible over the market. The focus should always be on the process and not the financial reward.

I hope you’ve enjoyed the article. Please feel free to post any comments and queries at the bottom of the page.




Leave A Response