Is Trading Psychology Included in Your Plan?

By Andrew Menaker, PhD

Some very common things traders have heard along their trading journey: it’s important to have a trading plan and stick to it, and psychology is a big factor in trading results.


All too often traders don’t include trading psychology in their plan because they don’t know what to put in there! A great place to start is with a morning or pre-trade routine.

Coming into the day with the right mindset is very helpful. For example, some traders like to use a pre-market checklist as part of their routine.

One trader I know uses the acronym H.A.L.T. (hungry, angry, lonely, tired). If he is any one of these, he knows he’s not in the best mindset and decides not to trade.

Another trader does five minutes of mental rehearsal to prepare himself.

And another trader reads his entry from the previous trading day and then does some pre-market journaling for the current day. In reading his previous journal entries, he looks for how much he stayed true to his plan or intentions, and then thinks about what obstacles may show up for him today.

There are other examples of trading psychology in a trading plan. One example is to have a process in place to determine if taking a break is needed. It’s east to get caught up in the market action, or the need to make our money back after a loss, etc. Knowing when to take a break can be hard, so planning for it ahead of time can be helpful. For instance, when you find yourself obsessing about making your money back from a loss to the point that risk management takes a back seat, time for a break! Include this in your plan.

These are a few examples, and there’s a vast number of trading psychology tools that can be a part of your trading plan.

Why don’t more traders include psychology in their plan? Besides not knowing what to include, two common issues that often get in the way are, “it will distract me from my purpose, which is to make money”, and “it didn’t work last time”.

Here’s a tip – if you recognize that FOMO is a problem for you, take some time to ponder the irony of, “trading psychology could be a distraction and get in the way of making money.”

How can you elevate your trading by including some psychology into your plan?

Andrew Menaker PhD is a trading psychologist; you can read more about him at