The psychology part of trading Part 1
Before you increase your lot size
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7/28/20266 min read
Trading Psychology for Beginners: The Mistakes I Keep Seeing
In this blog post, I want to talk about something that I think is just as important as learning how to read a chart: the psychology behind trading.
Over the last few months, I’ve helped several beginners get set up and start their trading journey. I guided them through the process step by step, and once they joined their signal group, I let the owner of that group take over from there.
Whenever they had questions, I was still happy to help.
Over time, I started noticing some of the same problems coming up again and again.
And it wasn’t just from the people I helped onboard. I noticed the same things with friends and other members of the trading groups I’m part of.
The biggest thing I’ve noticed is that new traders want to get started quickly and make money quickly without fully understanding their own risk tolerance.
And honestly, I understand it.
When you see other people posting winning trades, it’s easy to think:
“If they can do it, why can't I?”
But this is where things can start going wrong.
The Psychology of Greed
One of the biggest problems I see is traders using a lot size that is far too large for their account—and sometimes far too large for their mindset to handle.
You might see someone make a great trade using the same signal you received.
They make $100, $200, or even more.
So you think:
“I should have used a bigger lot size.”
Then the next signal comes in, and instead of using a small position, you increase your lot size because you want to make more money.
The problem?
If that trade goes against you, the loss is much bigger too.
This is where greed can take over.
You’re no longer thinking about the setup itself. You’re thinking about how much money you could make.
That can lead to overleveraging, emotional decisions, and eventually blowing up an account.
Start Small
This is why I always tell beginners:
Start with the smallest lot size you can comfortably trade.
Get used to the movement of the asset you're trading.
For the groups I follow, we mainly trade gold (XAUUSD), and gold can move very quickly.
Before worrying about making big profits, you need to understand how the trade actually works.
Learn how to use:
Stop-losses
Take-profits
Breakeven
Buy and sell orders
Different timeframes
Entry and exit points
And most importantly, get comfortable with seeing your trade move against you without immediately panicking.
Practice on a Demo Account First
I always recommend that beginners start with a demo account.
Use it to get familiar with the platform and learn how everything works.
Practice:
Opening a buy order
Opening a sell order
Setting your stop-loss
Setting your take-profit
Moving a trade to breakeven
Closing a trade
Understanding different timeframes
Watching how quickly an asset like gold can move
But there is one major problem with demo trading.
It's a demo.
When you win, you don't actually make money.
When you lose, you don't actually lose money.
That means your emotions aren't necessarily the same as they would be with real money on the line.
Sometimes, demo trading can even create a false sense of confidence.
You might have a great week and think:
“This is easy.”
Then you switch to a live account and suddenly everything feels different.
Live Trading Hits Differently
I can tell you now:
Live trading hits you differently.
Whether you're winning or losing.
When you're in a winning trade, it can feel exciting and rewarding.
You start watching the numbers move in your favor and thinking about how much money you're making.
But when the trade starts going against you?
That's when the psychology really kicks in.
You start feeling anxious.
You become nervous.
You start hoping the market will turn around.
You might move your stop-loss.
You might close the trade too early.
Or worse, you might increase your position because you think the market is about to reverse.
This is where trading psychology becomes extremely important.
Why Are Traders Getting Different Results From the Same Signals?
Something I've noticed over the last few months is that members in the same signal group can have completely different experiences and results.
Everyone receives the same signals.
So why are some people doing well while others aren't?
I've thought about this quite a bit, and I believe a lot of it comes down to how each person manages the trade.
Here are some of the biggest problems I see with beginner traders.
1. Consistency
The first question I would ask yourself is:
Are you actually consistent?
A few winning trades don't mean you're ready to increase your lot size.
You might have an amazing week.
You might even have an amazing month.
But that doesn't automatically mean you should start taking bigger positions.
One of the easiest ways to blow an account is to overleverage it.
For example, if you have a $500 account, jumping straight into large positions can expose you to losses that your account—and your emotions—aren't prepared to handle.
I'm not going to tell you that there is one universal "correct" lot size for every $500 account, because the appropriate position size depends on the instrument, stop-loss distance, and the amount you're willing to risk.
The important point is:
Your position size should be based on your risk—not how much money you want to make.
Consistency comes before bigger lot sizes.
2. Testing
Have you actually tested your strategy enough?
This is another area where beginners can get caught up in the excitement.
You have a great week.
Maybe you have several winning trades in a row.
And suddenly you think:
“I figured it out.”
But one good week doesn't tell you how a strategy performs in different market conditions.
You need to see how it behaves when:
The market is trending
The market is moving sideways
Volatility increases
News causes large movements
You experience a series of losing trades
This is why backtesting and keeping records are so important.
Don't increase your lot size simply because you've had a few good trades.
Build up enough data to understand what you're actually doing.
3. Understand Your Drawdown
You also need to understand drawdown.
Drawdown is essentially the decline in your account from a previous high before you recover.
You need to ask yourself:
How much am I actually willing to lose?
And I don't just mean financially.
You also need to think about what you can emotionally handle.
Increasing your lot size increases your exposure.
And increased exposure means larger potential losses.
Bigger position = bigger potential gain, but also bigger potential loss.
A trade that barely bothers you when you're using a small position can feel completely different when you've increased your lot size.
Know what you can realistically handle.
Not just what your bank account can handle—but what you can handle.
Don't Rush the Process
Before increasing your lot size, be patient.
Understand the risks.
Understand your own emotions.
And most importantly, build evidence that you're actually becoming consistent.
Don't increase your position size because you see someone else making money.
Don't increase it because you had three winning trades.
And don't increase it because you want to make money faster.
When you have enough trading history to understand your results, you understand the numbers, and you can manage your risk without letting your emotions take over, then you can consider increasing your position size.
Trading is a marathon, not a race.
Start Journaling Your Trades
One thing I strongly recommend is keeping a trading journal.
Write down every trade you take.
Record things like:
Entry
Stop-loss
Take-profit
Lot size
Result
Reason for taking the trade
How you felt during the trade
What you could have done differently
I've created a free downloadable trading journal template that you can use to keep track of your trades, whether they are wins or losses.
👉 [Download the Free Trading Journal Template]
The reason I recommend journaling isn't just to keep track of how much money you're making.
It's about finding patterns.
You might discover that you consistently close winning trades too early.
Maybe you increase your lot size after a losing trade.
Maybe you trade too much after a big win.
Or perhaps you perform much better during certain market sessions.
You won't know these things unless you track them.
Final Thoughts
If you're new to trading, don't focus on how quickly you can make money.
Focus on how well you can manage your risk.
The goal at the beginning isn't to make huge profits.
It's to survive long enough to learn.
Learn how the market moves.
Learn how your strategy works.
Learn how you react to winning and losing trades.
And most importantly, learn how to control your emotions.
The same signal can produce completely different results for two different traders.
Sometimes, the difference isn't the signal.
It's the person taking the trade.
Stay tuned for Part 2, where I'll continue to talk about trading psychology and other mistakes I've noticed beginners making.