FOMO and revenge trading are like a fever. You can take medicine to bring the temperature down, but if you don’t treat the underlying infection, the fever will return again and again.These behaviors aren’t the real problem, they’re just symptoms. The true cause of blown accounts runs much deeper. It’s about facing the personal trading demons that hide in our psychology.
The Briefing: Unmasking Your Personal Trading Demons
The Curse of The Trading Demons
It took me eight brutal years to start becoming consistent, mastering myself proved far harder than solving complex IT problems. During that time, every psychological weakness surfaced. For years I tried to banish these demons completely, and I failed.
Only recently did I realize the truth: these demons can’t be erased. They’re like ghosts. You can’t make them disappear forever. You can only learn to identify them and push them away, keeping them at bay through constant vigilance.The process is deceptively simple, yet it requires an ongoing fight:
- Identify the demon.
- Develop a specific way to cast it out.
Make no mistake, this is a battle! The demons won’t retreat quietly, and some countermeasures won’t work at first. If you drop your guard, they’ll drag you back into old patterns.
I am still fighting some of these myself, so I am not preaching from the mountaintop. Instead, here are the three demons that cost me a dozen real trading accounts, and exactly how I learned to fight them.
1. The Demon of Arrogance (The IT Smarts Trap)
Coming from a background of solving tough IT problems, I genuinely believed I was smarter than the market. If others took five years to become profitable, I thought I could do it in two.
That arrogance created a desperate need to succeed quickly. It pushed me to overfund accounts and take absurdly oversized risks, leading to faster and more painful failures. It also fed into other demons I’ll talk about later.
The turning point came after multiple blow-ups. Critical thinking finally broke through with a simple, undeniable truth: This makes no sense.
Arrogance was one of the easier demons to spot intellectually, but its grip was subtle. It whispered promises of quick wins. It took repeatedly smashing my head against the wall before I truly internalized the humility that trading demands.
2. The Demon of Anger (The $10k Revenge Trading Month)
This one was a beast.
Business stress, family issues, relationship problems, and external events like the pandemic created massive emotional spillover into my trading. No matter what I tried, I couldn’t contain it.
As I mentioned before, unresolved frustrations led me to revenge trade every single day for a month, losing a painful $10,000 in the process.
Confronting this demon took countless painful lessons and dedicated self-work. Now, before I even open my charts, I run a simple emotional check:
- How do I feel right now?
- Am I angry or carrying strong emotions that could ruin my trading?
If the answer is yes, I immediately reduce position sizing to the absolute minimum or better yet, I walk away entirely. Because I know I can’t control this demon 100% of the time, that minimum size acts as my fail-safe and last line of defense. It acknowledges that if anger takes over, it will likely be a losing day, but at least the overall risk to my account stays managed.
3. The Demon of Self-Blame (The Punisher)
Some traders externalize failure blaming the market, their broker, or their platform. I went to the opposite extreme: I turned all blame inward and punished myself brutally for every mistake.
Didn’t close a losing trade? My fault.
FOMO’d into a late entry that hit stop? My fault.
Oversized position? My fault.
This demon is especially insidious. It can drag you into despair and depression.
One low point was so severe that I couldn’t force myself to close a losing position. I watched the account bleed out, then stood in front of the mirror screaming at my reflection so violently that I had abdominal pain for nearly a month.
The breakthrough came from a radical shift in perspective. I stopped treating every mistake as a personal character flaw and started accepting myself with his flaws, emotional baggage, and all.
I began viewing trading errors like software bugs: problems that needed a precise fix, not evidence that I was worthless.
Practical changes that helped:
- Replaced traditional written journaling with video recordings of my trading sessions. Watching myself make mistakes in real time (and commenting on them objectively) created a healthy disconnect between the action and my self-worth.
- Started a daily practice of writing down 10 things I am grateful for. This simple habit dramatically improved my internal dialogue and helped me forgive myself.
Treating the Root Cause
Every trader has their own unique set of demons. Some overlap with mine; others are completely different. The key isn’t emotional willpower alone, it requires critical thinking applied when you’re calm.
My process now:
- Wait until I am rational and composed.
- Analyze what happened.
- Identify which demon emerged.
- Brainstorm and test a specific countermeasure.
- Give it time. If it doesn’t work, return to the drawing board.
Sometimes the fix is surprisingly simple: coding a custom indicator, or even calling your broker to add account restrictions.
The most important step is to stop drifting and scratching the surface. Treat the root cause so you stop falling into the same traps repeatedly.
This journey is part of what I call getting a PhD in knowing yourself, its a very demanding but ultimately freeing process that serious trading requires in my own experience.
If this guide helped you spot even one of your trading demons, consider buying me a coffee!
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