The Trader's Dilemma: Why You'll Never Be Happy With Your Trade Size
Ever had that sinking feeling after making a trade? You know the one. You watch a position you just bought plummet and think, "Why did I buy so much?" Or worse, you see a position skyrocket after you've sold and mutter, "I should have held onto more."
If this sounds familiar, you're not alone. Welcome to a common challenge of trading psychology: You're never happy with the amount you traded.
The Universal Trading Regret
This unavoidable feeling of regret isn't just about poor decision-making or bad luck. It's actually rooted in something much deeper: information asymmetry and adverse selection. But don't worry if those terms sound intimidating – I'm going to break this down in a way that will forever change how you think about your trades.
Picture this scenario: Someone offers to sell you a jar of coins for $160. Seems simple enough, right? But here's where it gets interesting.
If you buy the jar and later discover it only contains $140 worth of coins, you kick yourself for overpaying. But if you walk away from the deal and later learn the jar contained $200 worth of coins, you're equally frustrated for missing a great opportunity.
This, my friend, is the trader's eternal dilemma.
Why This Happens in Every Single Trade
The uncomfortable truth is that in nearly every trade you make, your counterparty might know something you don't. This creates what trading professionals call "adverse selection" – a fancy way of saying you're often at an information disadvantage.
When you buy a large position and the price drops immediately afterward, it's like the market is whispering, "The sellers knew something you didn't." Similarly, when you sell a modest amount and the price surges, it feels like buyers had insights you missed.
This psychological framework explains why:
When a trade is profitable, we wish we had traded MORE
When a trade loses money, we wish we had traded LESS
We rarely feel we traded exactly the right amount
The Psychological Impact on Traders
The brilliant insight here isn't just acknowledging this phenomenon exists – it's recognizing the profound psychological impact it has on every trader. This constant state of potential regret creates a unique tension that can either paralyze us or push us to become better traders.
Many beginning traders fall into the trap of thinking their dissatisfaction with trade size is just a matter of inexperience. "Once I get better at this," they think, "I'll know exactly how much to trade." But the pros know better. Even with decades of experience, this feeling never completely disappears.
How to Thrive Despite Never Being Satisfied
I’ve written before about how trading is what I call a “regret business.” So if we're doomed to never be truly happy with our trade sizes, how can we possibly succeed as traders? The answer lies in embracing this uncertainty rather than fighting it.
Here are some powerful approaches:
Use position sizing formulas to remove emotion from the equation
Keep detailed trading journals that track not just outcomes but your feelings about trade size
Develop a "regret minimization" mindset rather than a "profit maximization" one
Recognize that this feeling affects everyone – even legendary traders
The most successful traders don't eliminate these feelings – they harness them. That nagging sense that you could have traded differently becomes valuable feedback for refining your strategy.
The Deeper Market Truth
Understanding this concept reveals something profound about financial markets themselves. Markets aren't just mechanisms for exchanging assets; they're arenas where information advantages are constantly being leveraged.
When you make a trade, you're essentially making a statement: "I believe I know something that isn't fully reflected in the current price." Your counterparty is making the opposite statement. One of you will eventually be proven right.
This constant battle of information and perspective is what makes markets simultaneously frustrating and fascinating. One market participant thinks buy, the other thinks sell - This is what makes a market!
Turning Trading Psychology Into Your Edge
What separates consistently profitable traders from the rest isn't that they've somehow overcome these psychological challenges – it's that they've learned to use them as signals.
That feeling of "I should have traded more" becomes a prompt to examine whether you're being too conservative in your approach. The feeling of "Why did I trade so much?" becomes an opportunity to review your risk management procedures.
By reframing these unavoidable feelings as valuable feedback rather than evidence of failure, you transform a psychological burden into a competitive advantage.
Embracing the Uncertainty
Perhaps the most liberating realization is that this perpetual dissatisfaction with trade size isn't a bug in your trading psychology – it's a feature of markets themselves. It reflects the fundamental uncertainty that makes trading possible in the first place.
If everyone knew exactly what every asset was worth, and precisely how much risk to put on, there would be no trading opportunities at all. It's precisely because we all have different information and perspectives that markets can function.
So the next time you find yourself wishing you had traded differently, take a moment to appreciate what that feeling represents: You're participating in the beautiful, maddening, endlessly complex dance of information and value that we call the market.
And in that recognition, you might find a different kind of satisfaction – not with the size of your trade, but with your growing understanding of the market's deepest truths.
