Every trader knows that sharp and sinking feeling you have in your stomach when the market does not go as you plan. You probably had thought through a strategy you were convinced would work, only to implement it and end up losing all your investment. Of course, this is a very sad experience. However, it would help you to know that you are not alone.
Also, it is important to understand that a bad trade does not define you and that it is what you do next that matters the most. As such, I will be showing you practical steps you can take to bounce back emotionally and mentally after a bad trade. Let’s get right into it!
KEY TAKEAWAYS:
- A bad trade does not define you, and it is what you do next that matters the most.
- The first thing to do after a bad trade is to breathe deeply, splash water on your face, or do whatever helps you physically reset.
- It is important to resist the urge to revenge trade to avoid compounding your losses.
- Despite the bad trade you have experienced, you can still show up again, take the pain, and turn it into progress.
10 Things to Do After an Unpleasant Trading Experience
Let’s take what your response should be step by step.
Step 1: Just Breathe
I know this sounds basic. But if you’re in the aftermath of a bad trade, chances are your brain is flooded with cortisol. You’re probably stressed, frustrated, maybe even angry. This isn’t just about emotions; it is biology, where the rational part of your brain literally shuts down because you’re in fight-or-flight mode.
So, before you analyze anything, make any decisions, or even look at another chart, take a walk, breathe deeply, or splash water on your face. In other words, simply do whatever helps you physically reset.
Step 2: Resist the Urge to “Revenge Trade”
Revenge trading is when you try to make your money back right away and it usually comes from a place of emotional desperation. However, the hard truth is that you’re least equipped to make good trading decisions right after a bad one. That’s why the more you push to force a win, the more likely you are to compound your losses.
Step 3: Write It Down
Grab a notebook or open a doc to highlight and understand how the trade happened. You need to be honest with yourself. So, if you can, write about:
- What you were thinking before the trade.
- What made you enter.
- How you felt during the trade.
- What your plan was (or if you didn’t have one).
- Why you exited.
- What you’re feeling now.
By putting all these into words, you gain clarity and a sense of control. The trade moves from being a raw emotional wound to something you can study and learn from.
Step 4: Separate the Outcome from the Process
Sometimes, a trade can go bad even if your process was solid, and that’s part of the game. Interestingly, there might be other times the trade worked out profitably, but you broke every rule to get there. That’s luck, and it’s dangerous.
So ask yourself: did I follow my process? If yes, then you did the right thing (even if you incurred losses). Over time, a good process will beat randomness.
Step 5: Look at the Numbers, Not Just the Feelings
Once the emotional fog has lifted, go back to the trade and break it down technically.
- Did you have a stop-loss?
- Was the setup within your playbook?
- Was your risk or reward realistic?
This kind of analysis isn’t about dwelling on the mistake. It is about understanding your trade, especially the bad ones, to know exactly where you can improve.
Read Also – Understanding the Psychology of Crypto Trading
Step 6: Talk to Another Trader If You Can
Trading can be isolating, which is why having even one other trader to talk to can be incredibly grounding. So, find someone you trust, share the trade, and let them offer their perspective. Sometimes, a second pair of eyes can catch something you missed or remind you that you’re not crazy for feeling how you feel. If you don’t have someone like that yet, consider joining a trading community. But be careful to choose one that values honesty and growth over hype and bragging.
Step 7: Revisit Your Trading Plan
Now’s a good time to pull out your trading plan and analyze whether it is still serving you. Maybe the bad trade happened because your strategy is outdated. Or maybe your risk limits are too loose. It might even be that the plan is fine, but you didn’t stick to it. However, you would only know which is which when you revisit your plan. Additionally, if you don’t have a detailed trading plan, now is the perfect time to build one to protect your future trades.
Step 8: Deliberately Rebuild Your Confidence
Confidence doesn’t come from wins. Instead, it comes from doing the right thing repeatedly. After a bad trade, your confidence is usually the first thing to go. And if you’re not careful, that shaken confidence can cause you to hesitate, second-guess, and miss good opportunities.
So start small by trading with reduced size and focusing on execution, not profits. Furthermore, celebrate following your process, even if the trade doesn’t work out. That way, you’re re-establishing trust in yourself little by little.
Step 9: Learn Without Shame
Growth only happens when you can look at your mistakes without judgment. Therefore, instead of wondering why you messed up, try asking:
- What did this trade teach me?
- What was this trying to reveal about my system or mindset?
- How can I build a rule to prevent this in the future?
Step 10: Zoom Out
One trade does not define you. One day does not define you. In fact, one month doesn’t even define you. Crypto trading is a skill that takes time and patience to build. So, zoom out and look at your equity curve over a year.
Are you improving? Are your losses getting smaller? Are your wins more consistent? Even if the answers are messy, that’s okay. The most important thing is to know that it is a long game and you will keep pushing instead of giving up.
Final Thoughts
Despite the bad trade you have experienced, I want you to know that you are not broken. Indeed, you are building something real, which includes taking some hits and learning hard lessons. Now that you understand how to move forward, I encourage you to show up again, take the pain, and turn it into progress.
I believe you can, and I’m rooting for you!
References
- bettertrader.co – Bouncing Back from a Trading Slump: Tips for Recovering from Drawdowns
- obiex.finance – 5 Things To Do When The Crypto Market Is Down
- bankrate.com – Bitcoin and crypto prices are extremely volatile — What to do when they’re crashing
