All Traders Feel Like Quitting

The Two Pillars of Trading Success: Mental and Financial Capital

Mental and Financial Capital

You can’t make it if you:

1 – Run out of money
2 – Lose the desire to keep going

It’s capital preservation, both mental and financial.

But we are in a game of risk.

Now of course you could protect both by doing nothing and just watching the markets. But what’s the point of that? We need to risk both mental and financial capital to play the game.


How does mental capital get depleted?

It’s the combination of persistent loss and no real belief in recovery. You simply lose the will to continue, ‘why bother if you’re going to keep losing and feeling pain?’

(Honestly, I reckon all traders feel like quitting at some point. So don’t beat yourself up if you feel that.)

So how can we avoid big depletions in mental capital?

Firstly of course we need resilience (that’s Level 1 stuff for any worthwhile endeavour.)

Then what really helps is engineering your market experience to limit any emotional capital damage.

What do I mean?

Things like:

  1. Avoiding taking big risks (these can deplete your emotional capital more)
  2. Slowing things down (scalping can be a big brain drain)
  3. Watching your screen time (tempting as it is to sit in front of the screen all day, each hour reduces focus and willpower)

Anything to avoid any big mental capital withdrawals.


This one’s obvious… most of the time.

Taking substandard trades, taking too much risk when you are in ‘learning mode’

Going on tilt…

But the less obvious cause is the death by a thousand cuts. Small stops, the small risk that chips away and erodes your capital over time. This one’s a hidden killer because it depletes BOTH resources at once. Your capital gets hit and your confidence takes a knock.

Today, think carefully about each trading decision you make.

“Is this decision a sensible allocation of my mental and financial capital? If this trade doesn’t work am I ok with that?”

Because a quick cross-check is sometimes all you need to prevent yourself from getting caught in things that are not serving your trading.

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Thinking Fast and Slow

“Nothing in life is important as you think it is, while you are thinking about it”

This was a quote from Thinking, Fast and Slow by Daniel Kahneman.

And how true is that during the trading day huh!?

We can get sucked into believing the next trade is life and death!

If you haven’t read this book, I recommend it to understand more about how and why we make decisions.