Cobra Trading, Inc.
Jun 20, 2022

*This blog post was adapted from an article written by author Cruz Hernandez of To read his original article, visit


“Is there something wrong with me?” 

“I know how to trade, why can’t I make money consistently?”

“Everyonemakes it look so easy on social media! Why am I struggling?” 


If any of these questions sound familiar, you’re not alone.


I believe every trader has asked themselves these questions, or similar, at one point or another in their careers. I know I did. You spend hours and hours studying charts, seeking knowledge from successful traders, practicing, and back testing. You know the technical setups and read all the fundamental knowledge there is to consume, but somehow still you manage to botch trades and lose money. There are multiple stages that have to be reached and conquered in order to be successful in making any significant change: Precontemplation, Contemplation Preparation, Action, Maintenance, (Relapse) and Termination. To step back, realize, and accept where I stood within this model on my trading journey was a huge leap forward. When I realized my progress, I found my personal key to consistent profitability. 


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In this stage, traders usually fail to recognize the need for the emotional and mental components of trading. Most are looking to chase alerts or find a magical indicator that is going to be the holy grail to making them a lot of money. Traders in this stage can be oblivious to the risks that come with emotional trading. 


Tasks at Precontemplation stage:

Increase awareness of why change is needed.

Consider the risks regarding current trading behavior.

Consider the possibility of change.



At this point, traders feel their back is against the wall. Most have blown up a few accounts or only have enough funds to make a few more meaningful trades. They know that a change is needed outside of just the technical and fundamental aspects of trading, and most realize if they could stop making impulsive or emotional decisions that they would be grossly more successful. They want to enact a change to be more successful, but most procrastinate.


Tasks at this Contemplation stage:

Consider the pros and cons of existing trading behaviors.

Weigh the pros and cons of new trading behaviors.

Identify obstacles to change.



In the Preparation stage, traders commit to changing negative emotional and impulsive trading decisions. Most times, traders set an actionable trading plan for themselves to refer to and trade with, providing stability and straight-forward rules. The feeling of, “What else I have to lose by trying it this way?” is also prevalent.


Tasks at Preparation stage:

Increase commitment to change.

Write down trader goals.

Develop a plan and rule book.



In the Action stage, traders are enacting their trading plans set in the Preparation stage. The goal in this stage is to be consistent in forming new positive behaviors, therefore teaching the trader to realize the link between planning and success. Oftentimes, less stress is felt while sticking to personal trading guidelines. 


Tasks at Action Stage for traders:

Implement trading plan and rules.

Revisit and revise the plan if needed. 

Overcome difficulties and maintain the commitment.

Reward successes.



“I’ve changed.” This is the prominent feeling of a trader in the Maintenance stage. Traders have a new pattern of behavior sustained for a reasonable amount of time which becomes second nature in day to day trading. Traders become confident they can continue their new trading plan, and the behavioral change is embedded in their trading. 


Tasks at Maintenance stage for traders:

Maintain positive trading behaviors across multiple situations.

Adhere to plan and rules in trading.

Avoid a relapse into old ways. 



Although relapse is not necessarily a stage on its own, it is a common phase of failing to maintain the existing positive trader behaviors. Traders will start FOMO-ing into trades again, and will not stay disciplined to their stops or profit targets. Unfortunately, relapse is typical for many traders, but it is not inevitable. 


Tasks during Relapse:

Identify the triggers linked to relapse.

Reaffirm the commitment to change.

Revisit tasks associated with the stage the trader has regressed to.


Final Stage: Termination

At this point, the trader has no inclination to revert to their previous negative trading behaviors. The plan and rules set are considered a success.


Tasks at Termination stage:

None, the trader’s old behaviors are in the past.


    As said previously, a major key in trading is to be able to step back and look objectively where you are in this path. Once you are aware of your position, it will be significantly easier to make a plan and take action to maintain positive behaviors. Implementing the emotional and mental discipline aspect to trading along with the technical knowledge, fundamental knowledge and back-tested strategy is truly the key to becoming a sharper, smarter trader. 

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