Beware of The Trading Pandora’s Box
In Greek Mythology, Pandora’s “box” was actually a large jar given to Pandora (the first woman on Earth), which contained all the evils of the world. Pandora opened the jar and all the evils flew out, leaving only “hope” inside once she had closed it again.
Today, the phrase “Open Pandora’s box” means to perform an action that may seem small or innocent, but that turns out to have severely detrimental and far-reaching negative consequences.
How does the metaphor of Pandora’s box apply to trading? Glad you asked ;)
Sometimes, an action or even a thought or idea we have regarding trading the markets may seem small and innocent but leads to disaster. Have you ever been cruising along in your trading routine, doing well, staying on track, staying focused, but then you take one trade you knew was a bad one and it seems to lead you off course and you spiral you out of control? In trading, we are constantly battling temptation to trade too much, risk too much, make the wrong decision, listen to the wrong ‘guru’ and just one little misstep can ruin months or years of hard work.
Simply put, as traders, we grapple every day with the potentially disastrous consequences of opening the “Pandora’s box” of trading mistakes….
As the Greek myth says, once Pandora opened the box, all the evils were released and only hope remained. This is very true in trading as well; once you get off track, it really leads you down a road of temptation that often results in worse and worse trading mistakes until one blows out their account and is left with only the hope of making money. The best way to achieve trading success is simply to make sure you never open “Pandora’s box”. The first step to accomplishing that is by knowing all the ways in which this box can be inadvertently opened…
Here are a few common things that result in Pandora’s box of trading mistakes being opened…
The Pandora’s Box of Trading Mistakes will open if you…
Here are the two big ones…
Ah, over-trading, perhaps the arch-nemesis of all traders as it is constantly lurking in the darkness, waiting to snatch us from the path of prosperous trading. Perhaps more so than any other trading mistake, over-trading is one that very quickly leads to an ever-growing avalanche of trading mistakes. You take one trade that you knew beforehand didn’t meet your trading plan criteria and boom, you’ve opened Pandora’s Box. Maybe you can just ignore that bad trade and go right back to being a disciplined trader, but sadly, most people cannot do this. The feeling of regret sets in, then the anger comes, then they jump back into the market to try and “make back the money” they lost on that one ‘stupid trade’. At this point, the cycle is basically set and stone you’re very likely to lose a lot of money as you continue to chase the market and try to ‘fix’ your past trading mistakes (by trading more). They end up over-trading more and more until they blow out their account.
Perhaps you heard a ‘tip’ from a friend, but you know it doesn’t mesh with your trading plan, but you take the trade anyways. Sure enough, it results in a loss. You are mad now, because you knew you shouldn’t have taken that trade and it cost you money, and you broke your discipline and consistency. Most people will then commit another error by jumping back into the market to make back the money they just lost from that stupid trade. This leads to more losses and it snowballs out of control. One break from your routine, can cause this, just one. One little slip-up and you’ve opened Pandora’s box.
- Risk too much
Risking too much on a trade, more than you are comfortable with losing, is an excellent way to open the Pandora’s box of trading mistakes. Think about, what better way is there to become overly-emotional about a trade than by betting too big on it? It makes you think about it constantly and makes you micro-manage it, causing you to exit prematurely or otherwise at the wrong time. Not only that, whether you win or lose on a trade you’ve risked too much on, you’re doomed to open Pandora’s box…
If you lose, you will be hurt that you lost more money than you knew you were OK with losing. So, you’re probably going to try jumping back into the market to “make it back”, probably on a trade that isn’t there or that doesn’t meet your criteria, leading to yet more losses. If you win, you’re going to get over-confident and probably continue risking too much until you lose, sending you back to the market to make that money back and probably lose more.
You can see how one wrong move, either trading too much or risking too much will start a snowball effect of trading mistakes that simply get worse and worse until you blow out your account.
Here are some other things that may cause the Pandora’s Box of trading mistakes to open…
- You had a fight with your spouse or friend or perhaps a death of a loved one (or you’re otherwise in an emotionally distressed state) and you’re emotional from that, you turn to the market for ‘comfort’ – enter a stupid trade and lose, bam Pandora’s box is opened. Simply put, you MUST be in a good or at least a normal emotional state to be able to trade with discipline and consistency.
- Here’s one you probably didn’t think would open Pandora’s box: Trading from your phone. This seems little and innocent, but in my opinion, it’s a quick way to open the ‘box’ and let the evils of trading out. For one thing, the charts look smaller and more compressed on a phone, they simply look out of scale and you don’t see the price action or price patterns how you would on a computer or laptop screen. This is very dangerous. Trading from phones also can easily induce over-trading because you’re constantly tempted to look at your phone all day at work or wherever you are. For these reasons and more I advise against mobile trading.
- Finally, do you want to open Pandora’s Box quickly and easily? Start trading real money before you’ve learned how to read a price chart or before you’ve developed a strategy and trading plan. I get emails all the time from people who have clearly just started to learn about the markets and who are also trading live accounts and wondering why they’re losing all their money. Trading looks easy on the surface, but to profit from it consistently, it takes proper training, experience and time.
How to Avoid Opening Pandora’s Box
To start, the main thing you need to do to avoid opening the Pandora’s box of trading mistakes is to simply make sure you don’t commit any of the above errors. Now, that’s easier said than done, I know, but I’m going to give you some insight into how you can avoid them…
- Survive long enough to thrive.
You need to think of trading as a game of survival of the fittest, because it truly is. Only the strong survive in the trading world, and if you want to survive you have to plan and protect.
One of the biggest things that beginning traders get wrong is not managing their risk capital properly. They trade it all way and then when a high probably trade signal finally comes along, they have very little or no money left to take advantage of it. If you want to thrive or even just survive in trading, you must trade smaller position sizes in the beginning so that you preserve risk capital long enough to figure out what you’re doing. When you have truly mastered your trading strategy, then and only then should you increase position size. Remember, trading is a marathon, not a sprint.
- Learn to walk before you run
As I mentioned earlier, traders who start trading live before they’re ready, usually end up opening that Pandora’s Box of trading mistakes. So, how do you know if you’re ready to trade live? Well, it will vary from trader to trader / person to person, but, you should have attained a solid understanding of price action and how to read it and trade, as well as trader psychology and money management before you start trading live. Therefore, you need a proper trading education, so that you can learn these things in a proper manner.
Don’t worry about getting rich fast because it’s not going to happen. Worry about learning to trade properly and applying what you’ve learned slowly and small at first, then as you get more experience and confidence you can work your way up.
- Too much of anything will kill your trading account
I’ve written many articles on over-trading, but if you still don’t know why it’s so bad for your trading account, consider this…
Do you want to behave like a gambler in the market or like a skilled, calm and collected trader? I suspect your answer is the latter, and if that’s the case, you need to listen up…
You aren’t going to find a lot of high-probably signals every week or month in the market, because they just don’t happen with high-frequency. If they did, everyone would be rich. There’s a reason only 10% of people really make it as traders, because most people simply do not have the patience or self-discipline to withstand days and days of doing nothing if there are no trades worth taking, and that’s what you must do! Also, most people don’t learn enough to really know when a high-probability trade worth risking money on is present on the charts. So make sure you’ve learned enough to know what you’re trading strategy is and what a high-probability trading edge looks like so that you know when to trade and when to sit on your hands.
- If you play with fire, you’re doing to get burned
Do you like your money? Stupid question, right? Well, most people trade as if they HATE their money, which is REALLY stupid, right?
If you’re risking more than you can comfortably stand to lose per trade, you’re acting as if you hate your money. How do you know how much you can afford to lose? Well, you can plan it all out and figure it out mathematically, or you can simply do what I call the risk sleep test.
Can you fall and stay asleep soundly at night? Are you Ok with not looking at the charts / your trades for 24 hours? If so, you’re probably risking a safe amount. However, if you’re preoccupied with your trades in any way, shape or form, you’re risking too much and as a result you need to dial-down the position size you’re trading.
- Learn to plan and anticipate
The best way to prevent your future trading self from inadvertently opening Pandora’s box, is to learn how to anticipate trades. You need to develop a trading plan built on anticipation, instead of only reacting to the market.
Your approach to the market should be to learn enough about price action and technical analysis so that you can begin reading the market like a book and identify areas on the chart you’d like to trade from before the market gets there. Then, if the market reaches the areas you’ve predefined and forms a price action signal there ideally, you only need to execute the trade, not think. The thinking and planning should be done in advance. If you wait until you think you see a signal to start planning your approach, you’re already too late in most cases.
- Have a trading plan
Finally, perhaps the ultimate tool at your disposal to keep Pandora’s box sealed shut, is a good trading plan. You need a trading plan so that you rely on the plan to guide you, rather than just your feelings. We humans are flawed, but our saving grace is our ability to plan into the future. By planning our trading approach, we eliminate much of the possibility of self-sabotage in our trading.
Trading plans also provide accountability. Trading is a very solitary endeavor. Whilst it’s awesome there are no bosses telling you what to do, it’s a doubled-edged sword. What’s stopping you from over-trading or risking too much? Only you, and you cannot trust yourself 100% in the trading realm where you’re constantly bombarded with temptation. But what you can do is develop a trading plan and commit to staying accountable to it.
The key is to stay disciplined, stay consistent and stay accountable. You must do this for every aspect of trading because if you get off track on anything, you’re going to open Pandora’s box and then it’s lights out!
I’m here to help you avoid opening Pandora’s box, to survive the trading game long-term so that you can not just survive, but thrive. I want to help you so that you will be ready and waiting to strike like a crocodile with capital ready when you have mastered and honed your skill. You can’t hack or cheat the markets, if you don’t follow the basic principles you will be chewed up and spit out faster than you think. Don’t let your ego and impatience destroy your trading account or chances of success…
However, I can only share my knowledge and experiences with you, but it’s up to you to listen and take action and heed the warnings I’m providing. If you do this, you will end up with the results you’re looking for, if you don’t, then sorry but you likely won’t make it.
What’s did you think of this lesson? Please share it with us in the comments below!
67 Comments Leave a Comment
The truth and only the truth stop overtrading, stop risking too much for the beginners take this advice because for the old guards this resonates very well with us.
Have a trading plan, do not trade via the phone.
Please reread the article it is very significant if you want to survive in the game long enough.
U are a great tutor, God bless you. Ameen
Thank you for the great lesson.
Thank you for these 12 killer trading lessons Nial… this one can’t have resonated more… having blown the account recently…. I was just like Nail mentioned ticking along nicely for about 4 or so months… (3 years of screen time trying various momentum techniques with various success) but opened Pandora’s box by a couple of stupid decisions….. normally ok to recover BUT the next driver to accelerate my demise… was that I was depending on about 1R/day of success to cover costs and leave a margin to build the account (4hour signals)… that gave the second seed to destruction… to try and make up for stupidity and also make the coin to live off (two pressures)… my insight/after action review as if it were… is trade til you “got it” on a demo… as in the price signal with confluence etc… and also getting the feel off the currency pair or index or commodity you are trading… and then trade with an account big enough that a trade a week makes it all worth it!! Demanding too much of the system (i.e. too small and account) was my demise…
thanks so much,so encouraging.will keep learning and try the discipline thing.
Thanks so much. your articles are helpful
Technically the box/jar was actually a trap devised by zeus. He gave pandora the gift of curiosity and then gave pandora the box. So pandora opened the box because of zeus’s gift of curiosity not because she wanted to.
Thanks nial, your lesson very powerful
Cam teknik harapan yer neil
Thanks nial, your lesson very powerful
Am still trading on the demo and learning before taking the bull on the horns. Thanks for the information. There is so much to learn about how to trade like a professional. After reading your blog I gained wisdom and looking forward to learn more
Very good efforts a summary description of trading mistakes and their remedy. Keep it up, thanks
I love your article. simple, well-briefed.informative, consize and to the point. Thanks.
Can See it
Good info as usual.
I am advancing forward reading you articles.thank you very much for your help.
Good, Good, Good, Thanks for your articles.
Another gem nial.
I have made all these mistake, especially overtrading, i now trade about twice a week, watching 15 pairs on the higher timeframes and i am almost profitable. thank you nial your articles are like a breath of fresh air, please do not stop writing them, we are listening, the ones who want to learn anyway!
An awesome lesson from a psychological point of view, I am going to try as much as possible to follow all the guidelines when am back live in the markets
To become a trader you have to think like a trader . Great advice.Thanks Nial
Pure wisdom :)
Thanks Nial, you speak the 100% truth about trading. I never miss a post!
You are number one Nial
Thanks for sharing nial..gbu
Good Topic, Good for the season and Timely.
I feel like every time I get an email from Nial it’s like a gift of superior wisdom that will increase my mental awareness. I have witnessed for myself that it is doing just that. There is only one email I watch out for now and that’s Nial’s next post. It took me a couple of expensive mentor courses and almost two years later to realize what I actually had all along with Nial’s approach. Please keep doing what you are doing Nial. I have seen a real difference in my trading skills over the last couple of months. Your weekly and daily commentary are gold in teaching me what to look for.
Thanks a Million! Very grateful.
I love this post. I am guilty of opening the Pandoras Box this week. Now I am hoping to stay alive next week! Lol. Thanks Nial for the reminder. It came just in time
Very blunt and to the point, we as newbies have to learn to heed mistakes and listen to people like Nial, as someone once said ” Life is like a box of Pandora, you just never know what you are going to get next” – in all probability losers. Thanks Nial.
Great one Niel.Happy New Year to you and your family.
I have made such silly mistakes in the past. Now I am beginning to be patient with the markets to avoid the mistakes of overtrading.
Thanks so much for sharing your experience and knowledge.
thank you for this piece, its priceless.
Thank you much more seeing you have started the year for us with good intent.
We shall make it.
Happy New Trading year to you and your members.
A great lesson, each and every other thought that you are the best mentor.
Great article, Thanks Nial oce again
I’m a victim of trading on the go, and my story was “badly” bad. Each time I felt the heat of fire of retracement or anything against my position, I ran out of the kitchen!
Happy new year Nial
This year I started my demo ,and through your articles I am aware of the trading Pandora ‘s box.Your teachings and advice’s make me to take it simple stupid.
I am looking forward to join your students as soon as possible.May God richly bless you and your family,and keep on doing the good work.
Still getting better! 100% right on the money;) Awesome article.
Hi,Nial!You are all right.you are my mentor and I have been following you for the past 4 years.I am now a profitable trader equally trading for a well-known forex broker .Consistently making money for the past 2 years with your mentorship.Thanks a lot Boss.It is not how far but how well….
One thing have taken from this article is taking my time to learn….its not easy esp in the trading realm cz of the urge of making money, but its worth it.
This is what Im learning from you, Nial – not to go looking for trades but to wait until a lovely ripe piece of fruit drops out of a tree right at my feet. My strategy yields a higher volume of trades tthan yours, but the point is the same: nothing but ripe fruit, gotten by standing under the tree, not by shaking the branches.
This article is timely. I became a victim of big position size with multiple position on a single pair, though it was a good trade on 15 minutes time frame. The trade gained much pips along side a trailing stop, I wondered why the trailing stop didnt lock my profit, exit the trade without hitting my stop loss.
Great. I have learnt a lot from you Lial. Trading is more that placing a trade but involves self discipline, emotional and psychological control, money management and other important factors. Thanks for continuously mentoring us.
Your articles are always knowledgble and inspiring.
Guilty of all of the weaknesses mentioned. However, the will to succeed (and a very low balance) forced a timeout and rethink. Your Pandora’s Box article is a God-send – thank you Nial.
Excellent article Nial!!! Yes I’ve made these mistakes many times and I’ve “been forced through my mistakes” to trade patiently and “safely”.
Happy new year Nial, all the best for you and your loved ones :) thank you for all the knowledge shared in 2017.
The key is to stay disciplined, stay
consistent and stay accountable . My Mentor is the best Trading Teacher in the world
thanks again Nial for you insperation, came just at the right time when i needed it as i was just starting to question my confidence in trading and having a few self doubts …Merry Christmas and a very prosperous New Year to you
Great article, if followed will improve trading.Thanks alot.
Thank you Nial
I can tell you from experience this is the way to trade , if you are loosing just stop and wait and listen to Nial dont even trade the market will not go away and you will start to see the truth in this way of trading
Great have these principles concretized in my mind
I am really impressed by this lesson, ride on, you are great.
Great article Nial, continue to share your trading knowledge with us. Thanks
Well written and great advises. Recently I turn myself into smaller time frame and kept killing myself. This article is a reminder to me. Thanks Nial for your constant reminder.
Every single article makes me a better trader, and I hope other people feel the same way. Thank you Nail
Really great advice. you need to think like a casino in probabilities and have a winning attitude to survive.
Very revealing. Merci beaucoup Nial
Thanks Nial, Great work!!!
Excellent article as usual.