Trade Without Regret:
The Power of ‘Choice Closure’
How to Lock in Confidence with Your Trades
Have you ever pulled the trigger on a trade setup, only to regret it immediately afterwards?
The moment you enter the trade is the moment you start wondering;
“Will this work?”
“Have I made the right decision here?”
Worst-case scenario you get nervous and close the trade only to see it rip off in your direction…
Familiar?
Yep, we’ve all done it, here’s how to eliminate that completely.
Choice Closure
In a study by Yang and Galak in 2015, participants were asked to make a choice from a menu.
Some participants were instructed to physically close the menu after making their selection, while others were not.
The act of physically closing the menu served as a symbolic gesture of finalizing the decision.
Those who closed the menu felt more satisfied with their choice and experienced less regret.
Suggesting that performing a physical act related to choice can reinforce psychological closure, helping individuals move on from the decision.
That all sounds very nice when ordering a 50-quid steak…
But how does that apply to trading?
Trader's Regret
In trading, if we leave the decision open-ended (like our open menu example) our brain has a tendency to obsess over the other choices.
- Not taking the trade
- Taking the opposite position
- Taking more or less size
None of these are desirable.
We need to make the decision and then achieve choice closure.
How can we do that if we don’t have something to ‘close’ like a menu?
Here are some things we can do instead…
- Create a Post Trade Routine: After the trade is taken, practice letting go of the decision, accepting you’ve made the best decision possible with the data in front of you and flooding yourself with certainty.
- Don’t Overanalyze: It’s easy to fall into the trap of ‘shoulda, woulda, coulda’ right? You can’t constantly live under the cloud of trader’s regret. Learn and improve your decision-making rather than regretting.
- Use Physical Gestures: After the trade, close down your trading platform or write “done” in your trading journal. Something symbolic that gives you choice closure.
- Limit Reviewing Past Trades: Set aside a dedicated time for trade review. Preferably when the market is closed or you are done for the day. Resist the urge to review whilst trading potentially triggering overthinking.
Owning a human brain feels like a minefield sometimes!
Biases, tendencies, and hardwired habits to unpack…
But understanding why we think the way we do can help us unlock better trading and make us feel just a little bit better when we do something silly…