InDecision Academy · indecision.io/cheatsheets
Psychology Playbook — The Mental Edge
Psychology Playbook
The Mental Edge — Decision Trees, Bias Fixes, Trading Journal. 80% of trading losses come from emotion, not bad setups.
The Fundamental Truth
80% of your trading losses come from emotion, not bad setups. You have good ideas. The problem is execution under pressure. Fear paralyzes. Greed blinds. Revenge overrides logic.
This playbook fixes that. It gives you decision trees to follow when emotion is high, cognitive bias checklists to catch yourself before you trade badly, and a journaling system to turn losses into lessons. The goal isn't perfection — it's disciplined consistency.
Pre-Trade Decision Tree
Follow this flow BEFORE every entry. If any answer fails criteria, skip the trade.
Q1: Do I have a clear stop-loss level?
Q2: Can I articulate WHY this setup works in one sentence?
Q3: What is my conviction score?
Q4: Is my portfolio heat <3%?
Q5: Have I taken ≥3 trades in last 4 hours?
Pro Tip
Print this tree and tape it above your monitor. When you feel the impulse to trade without thinking, read it first. That pause is everything.
Post-Trade Decision Tree
After the trade closes, follow this framework to extract lessons and calibrate next trades.
If WIN:
Profit >1.5:1 R:R?
Take full profit, excellent execution.
Profit 1:1 to 1.5:1 R:R?
Trail stop on 50%, lock in wins on remainder.
Profit <1:1 R:R?
Analyze why early exit happened. Journal it.
If LOSS:
Loss <1% account?
Good, discipline worked. Move on.
Loss 1-2% account?
Acceptable. Analyze setup quality. Don't revenge trade.
Loss >2% account?
Something went wrong. Investigate immediately. Stop trading 2 hours.
If PARTIAL WIN:
Stopped out but thesis was right (price later hit target)?
Review: Was your stop too tight? Did you honor your stop? This is not a failure — it's risk management working. The discipline of honoring your stop matters more than one missed target.
Thesis intact but stopped out (price hit stop then reversed)?
Review: Was the stop at a valid technical level? If yes, this is a GOOD trade — the outcome was just unlucky. If no, adjust your stop placement method. Check ATR-based stops vs. fixed-percentage stops.
Eight Cognitive Biases That Kill Traders
Recognize these patterns. Know your personal weakness. Have a fix ready BEFORE emotion hits.
Recency Bias
The Trap
Last 3 candles were green, so the 4th will be too.
The Fix
Check the 50-candle chart. Recency doesn't apply beyond 5 minutes.
Confirmation Bias
The Trap
This chart looks bullish, so I'll only look for bullish signals.
The Fix
For every bullish signal, find the strongest bearish signal. Trade the counter.
Loss Aversion
The Trap
I'm down 2%, so I'll hold and hope for a reversal.
The Fix
Pre-trade, define stop-loss. Write it down. Honor it.
Overconfidence
The Trap
I won 5 in a row, so time to 10x leverage.
The Fix
Wins don't change probability. Use same size. Bad streak coming.
Anchoring
The Trap
I bought at $50, so $45 is a steal.
The Fix
Markets don't care what you paid. Only current probability matters.
FOMO (Fear of Missing Out)
The Trap
The move already happened, but I'm jumping in anyway.
The Fix
If the move is >50% of ATR, you're late. Wait for pullback/reentry.
Hindsight Bias
The Trap
I knew it would happen. I should have traded.
The Fix
Did you actually have conviction BEFORE? Check your journal. Probably not.
Sunk Cost Fallacy
The Trap
I'm down $500, so I'll overtrade to get it back.
The Fix
That $500 is gone. Trade the next setup on merit, not revenge.
Trading Journal Template
Copy this into a spreadsheet or notebook. Fill it out within 1 hour of closing. No journal = no learning.
Date: 2026-03-17 | Pair: BTC/USD | Timeframe: 4h BEFORE ENTRY: - Setup type: [Doji at support / SIRII / Flag breakout] - Conviction: 7/10 - Stop-loss: $50k (3% from entry) - Target: $54k (2:1 R:R) - Risk: $1,200 (1% of account) - Leverage: 5x - Emotional state: [Calm / Excited / Fearful] EXECUTION: - Entry price: $51.2k - Entry time: 14:32 UTC - Initial slippage: -0.1% OUTCOME: - Exit price: $53.8k - Exit time: 16:45 UTC - P&L: +$2,600 - Actual R:R: 2.2:1 ✓ POST-TRADE REFLECTION: - What went right? Setup was textbook. Volume confirmation perfect. - What went wrong? Exited early (panic at 1.5:1). Should have trailed. - Did I follow my rules? Yes, conviction was high, stops were tight. - What to improve? Practice patience. Let winners breathe. - Bias check: Did recency/FOMO play a role? No. Good discipline.
Key Discipline
The reflection section is non-negotiable. You're not tracking P&L — you're tracking behavior. Did you follow your rules? That's the only metric that matters. Wins from bad discipline are lucky. Losses from good discipline are lessons.
Weekly Retro Framework
Every Sunday, ask yourself these eight questions. Honest answers only.
Win rate?
60%+
Average R:R?
2:1+
Largest win vs. largest loss?
Loss <3× avg loss
How many revenge trades?
Goal: 0
Best trade of week?
Why did it work?
Worst trade of week?
Honest assessment of setup quality
Which bias hurt most?
[Recency / Overconfidence / FOMO / other]
One rule to double-down on next week?
Write it down. Commit.
Action After Retro
Don't just review. Write down ONE rule you'll double-down on next week. Make it specific. Make it measurable. Pin it where you'll see it every day.
Four Mindset Frameworks
Psychology is half mechanics, half philosophy. These frameworks are your compass when doubt creeps in.
The Humble Trader
Markets are smarter than me.
I don't predict. I react to what the price is doing NOW. Pride kills accounts. Markets humiliate overconfidence.
The Process Investor
I control process, not outcomes.
I don't control fills, slippage, or whether this trade wins. I control my entry, stop, size, and discipline. Good process = good outcomes over time.
The Emotional Sentinel
My emotions are data.
Fear = something's wrong. Greed = something's wrong. Both signal caution. I listen to my body before I trust my chart.
The Stoic
I accept what I can't control.
I control my entry, stop, size. I don't control fills, slippage, or outcomes. I accept reality, adjust, move forward.
When You Feel It, Do This
| Feeling | Action |
|---|---|
| Overconfident (3 wins in a row) | Review your worst 3 trades this month |
| Revenge (just got stopped out) | Walk away for 1 hour. No trades. |
| FOMO (missed a big move) | Check: is there still a valid setup? If not, wait. |
| Fear (hesitating on a valid setup) | Review your scorecard. If score > 60, execute. |
| Greed (moving TP further) | Lock in 50% at original target. Let rest run with trailing stop. |
Quick Checklist (5 Items — Mobile-Friendly)
- Reviewed yesterday's trades
- Portfolio heat under 5%
- Key levels identified
- Max 3 trades today
- Stops are set and non-negotiable
Daily Discipline Checklist (Full Version)
Before Market Open
- ✓ Clear mindset. No revenge from yesterday.
- ✓ Portfolio heat calculated (<3% target)
- ✓ Pre-trade tree printed or visible
- ✓ Risk per trade set (1% max)
- ✓ Read journal from best 2 trades
During Trading
- ✓ Run pre-trade tree BEFORE entry
- ✓ Stop defined BEFORE entering
- ✓ Monitor emotion, not just price
- ✓ Follow exit rules (no shortcuts)
- ✓ Journal within 1 hour (post-trade)
End of Day
- ✓ All trades journaled with reflection
- ✓ Portfolio heat logged
- ✓ Win rate for today calculated
- ✓ One thing you'll improve tomorrow
Appendix: Blank Journal Pages
Print this section for your trading journal. One page per trade. Fill out within 1 hour of closing.
Date: _________ | Pair: _________ | Timeframe: _________
BEFORE ENTRY:
Setup type: _________________________________
Conviction: ___ /10 | Stop-loss: __________ | Target: __________
Risk: __________ | Leverage: __________ | Emotional state: __________
EXECUTION:
Entry price: __________ | Time: __________ | Slippage: __________
OUTCOME:
Exit price: __________ | Time: __________ | P&L: __________
Actual R:R: __________
POST-TRADE REFLECTION:
What went right? _____________________________________
What went wrong? _____________________________________
Did I follow my rules? ______ Why/why not? _____________
What to improve? _____________________________________
Bias check? _____________________________________
Date: _________ | Pair: _________ | Timeframe: _________
BEFORE ENTRY:
Setup type: _________________________________
Conviction: ___ /10 | Stop-loss: __________ | Target: __________
Risk: __________ | Leverage: __________ | Emotional state: __________
EXECUTION:
Entry price: __________ | Time: __________ | Slippage: __________
OUTCOME:
Exit price: __________ | Time: __________ | P&L: __________
Actual R:R: __________
POST-TRADE REFLECTION:
What went right? _____________________________________
What went wrong? _____________________________________
Did I follow my rules? ______ Why/why not? _____________
What to improve? _____________________________________
Bias check? _____________________________________
Date: _________ | Pair: _________ | Timeframe: _________
BEFORE ENTRY:
Setup type: _________________________________
Conviction: ___ /10 | Stop-loss: __________ | Target: __________
Risk: __________ | Leverage: __________ | Emotional state: __________
EXECUTION:
Entry price: __________ | Time: __________ | Slippage: __________
OUTCOME:
Exit price: __________ | Time: __________ | P&L: __________
Actual R:R: __________
POST-TRADE REFLECTION:
What went right? _____________________________________
What went wrong? _____________________________________
Did I follow my rules? ______ Why/why not? _____________
What to improve? _____________________________________
Bias check? _____________________________________