Daytrading Mind Traps

“One way our brain helps keep us safe is to protect us from an awareness of our weaknesses. The brain believes that it is better to be falsely confident than recognize the real risks. This protective mechanism tends to work against us in trading.” Kenneth Reid, Ph.D

In this section of this coaching website you will find a great deal of information on Seven Factors that contribute to Out-of-Sync Syndrome. The causes are: Aversive Conditioning, Random Rewards, Mind Traps, Scared Money, Procedural Errors, The Trading Trance and Syndrome X

This page describes the two most common Mind Traps, Hindsight Bias and Competency Bias. This is about how we fool ourselves into thinking trading is easy. Kenneth Reid, Ph.D 


The mind can play tricks on us. Intuitive Trading is an attempt to mind read the market, which makes us susceptible to whipsaws. Hindsight Bias causes traders to underestimate the difficulty of trading, while Competency Bias causes us to over-estimate our abilities. These are mental banana peels that set us up for a fall.


mind reading the market

Intuitive trading is a natural response to excessive randomness and non-linearity in the market. But making informed guesses is not the same as formulating a rule-based pattern-recognition system that gives a trader a true edge. Without a rule-based plan, intuitive traders expend a great deal of energy mindreading the market, which will not improve your odds of success. In fact, professional traders make a good living exploiting the emotionally-driven behavior of intuitive amateurs.


puzzzled trader

Trading appears easy because when we look at a chart, the attractive low-risk entries and ideal exits are obvious, in retrospect. This gives the false impression that entries and exits would also be clear in real time. “Hindsight Bias” is the illusion that the past was predictable.

Trading for a living does not happen on ‘cold charts,’ but rather at what Alan Farley calls the “hard right edge.” Trading successfully requires us to get comfortable with uncertainty; being willing to take action when one still does not know quite enough.


Many people who come to trading have been successful in other careers and think their business skills will help them succeed. Unfortunately, this is rarely the case. Neither prior success, IQ, market savvy, maturity, creativity, management skills nor any other business leadership qualities will prepare you to succeed as a trader. Instead, they are more likely to set you up for failure. Why?

frustrated trader

The world of modern business rests on principles of social order and behavioral predictability that simply do not exist in the trading environment. For example, if you drive a car, you have been conditioned to expect a certain minimal amount of orderly behavior from your fellow motorists. Along with you, they will stop on red and go on green; they will stay inside the white lines; they will mostly drive near the speed limit.

That orderliness and predictability is just not present in the market environment. Quite the reverse. One is much more likely to encounter paradoxical and unpredictable reactions to news and other obvious catalysts. Markets can reverse on a dime for no apparent reason. Trying to make sense of the market can drain all your mental reserves.

Compared to the business world, the signal to noise ratio is much poorer in the markets and cannot be filtered to achieve a comfortable predictability. Perhaps the best preparation for trading is martial arts or combat experience because both teach us to expect the unexpected.

trading success


To trade successfully, you need to eliminate Mind Traps. My FREE Trading Risk Profile is one way to evaluate your susceptibility to Mind Traps. My trader coaching program is focused on installing a mindset that is effective for trading. Email me to schedule a FREE 15-Min. CONSULTATION or click here to sign up now.

If you take no other action today my friend, be sure you order my Positive (+) Neuroprogramming MP3 TRAINING A WINNING MINDSET. Nothing is more important than becoming proactive about
your mental-emotional state while trading. It could save you thousands!

Kenneth Reid, Ph.D

Mastermind Pro

The Cycle of Self-Sabotage can run for years. To finally break this cycle, you need to permanently root out bad behaviors and replace them with good behaviors. There's a new technology that can help you do that... for less than the price of your daily coffee. Read more.

Free AWARE Trader Personality Profile

Finally, an easy to understand Personality Profile that shows you exactly which personality traits help (and hurt) your trading! Read More


Free Report: Secrets of the Top 4%

The largest academic study ever conducted on day traders revealed that most lost money .... even during a raging bull market! About 15% did very well each year, but fewer than 4% of daytraders were able to make significant profits two years in a row. Read More


Increasing Discipline: The Easy Way! (On sale for just $149)

Many aspiring traders lack sufficient self-discipline to stay the course as a trader and protect capital during the learning curve. Willpower is not enough because trading challenges us in profound ways.

Increasing Discipline: The Easy Way is designed to help you increase self-discipline naturally, effortlessly, painlessly using (+) Neuroprogramming technology. Read More


Create a Winning Mindset: The Easy Way! (On sale for just $149)

According to Mark Douglas, the #1 characteristic of top traders is a lack of fear. These folks maintain a positive attitude regardless of the outcome of any particular trade. This technology will help you trade like they do. Read More


Risk Profile

DayTrading attracts individuals with different natural trading abilities. Some people are natural-born daytraders. These Market Wizards (4% of daytraders) are natually fearless, competitive and report little emotion in trading. Read More


Free 15-min Consultation

Trading can be a lonely profession. Chat about your trading for 15-min with a coach who trades. I may be able to offer a few quick tips that will get you back on track. Read More


Free Webinar Notification


Trading Psychology Blog

Traders: Don’t make this costly psychological mistake

The stock market is often likened to a casino, and there are parallels. In both venues, people put money to work in anticipation of rewards, while cognizant of the risks.…
Read more

Trading Psychology: How to Overcome Chasing

Do you have a tendency to chase price? That means, buy high in the hope of selling even higher. Or selling short during a rapid decline without waiting for a…
Read more

Setting Smart Stops

Intelligent risk management means using stops. If a trader constantly gets stopped out, however, he/she may develop an aversion to using stops. They blame the stop, but the problem is…
Read more
View All Posts

Trading Psychology Video Blog

The Psychology of the Zero Sum Game

Zero sum markets are significantly different than asset (equity) markets. In this short video I will summarize the psychological and technical adaptations that aspiring traders need to make in order…
Read more

Trading Psychology: Exploiting The Mistakes of Other Traders

Greetings traders, this is Dr. Kenneth Reid. This video illustrates how traders can get trapped on the wrong side of the market and how you can exploit that circumstance if…
Read more

Mastering Volatility

Market volatility has tripled over the last few months, which poses technical and psychological challenges. In this video I point out 8 ways in which you can master volatility and…
Read more

How to Avoid Whipsaws in Trading

Trading without a technical trading plan puts active traders into visual and emotional reactivity. The more you react, the more often you will experience whipsaws. Reactivity is what makes us…
Read more
View All Video Posts

Coaching Testimonials

"When I met Kenneth Reid I was at the end of my rope. It turns out, signing up for his 6-week program was the best thing I’ve ever done. I learned more with Ken in the first 3 days than I had in years of trading. Part of the reason is that he doesn’t just teach “how to trade,” he teaches you how to be a trader.

This is the most in-depth and highly personalized training I’ve ever experienced. I’ve learned how enter trades with minimal risk and maximum reward. My first day trading I had a 10 1/2 point trade on the ES. I had never done that before. He has shown me how to keep my losses very small and put myself in a position to make consistent profits..." Read More