After a bad week, the usual advice points to two fixes: a new strategy or a stricter set of rules. You try one, then the other. Three weeks later, the same line shows up in your journal: long, stopped out, down two hundred dollars. The strategy and the rules both changed, and the line stayed where it was.
The line comes back because the reason behind it comes back, at the same moment of your day, in the same words inside your head. Georges Vahanian built his book The Mistake Has a Color on that observation. He sorts trading mistakes into four families, taken from the DISC model of behavior, and gives each family a color. The color describes the mistake. It says nothing about the person who makes it.
One journal line, four different reasons
Picture that same line in four journals. The first trader opened a second position one minute after the stop, at double the size, because he wanted the money back at once. The second bought a stock the group chat had been praising since breakfast. The third moved her stop a few cents lower and kept holding, sure the price would return. The fourth watched the setup form, waited for one more confirmation, and saw the move leave without him.
Same market, same rule, same loss. The mistake behind the loss differs in each case, and a fix aimed at one of them misses the other three. A trader who holds losers gains nothing from a lesson on patience, and a trader who enters late on hype gains nothing from a faster platform.
The four families of trading mistakes
Each family grows out of a quality that serves you well on most days. The trouble starts when you use that quality at the wrong moment.
- Red: acting before deciding. The revenge trade and the doubled size after a loss. The speed that helps you at the open also lets you fire a trade in the minute after a stop.
- Yellow: entering for a reason outside the plan. The tip, the story, the ticker your coworkers mention at lunch. Your interest in people and ideas keeps you informed, and on a bad morning you follow it into trades your plan does not name.
- Green: holding what the plan says to close. The loser that might come back, and the stop you nudge a few cents lower each day. You rely on steadiness to sit through drawdowns, and you use the same steadiness to stay in a trade long after the date you wrote down.
- Blue: preparing instead of acting. One more indicator, a perfect entry missed by three cents, a position at half the size your plan allows. You rely on care to keep losses small, and you end up keeping your good trades small as well.
The colors describe mistakes, and any trader can make any of the four. A fast trader can make the Blue mistake of waiting during a quiet week, and a careful one can make the Red mistake on the day a stop hurts more than usual. The family worth your attention is the one that keeps showing up in your journal.
More discipline does not reach the mistake
Discipline is a general effort, and you make a repeated mistake in a specific minute. For the Red family, that minute follows a stop. For the Yellow family, it starts when a message lights up your phone in the middle of the session. The Green minute comes on the day your plan says to close, and the Blue one lasts as long as you look for one more reason before the click.
Resolving to be more disciplined gives you no time and no place. A rule works when you write it for that minute and put it where your eyes land when the minute comes, on the desk or taped to the laptop. The book gives each family one rule of that kind, the one that held for that family when the others did not.
Find the mistake you repeat in ten trades
You need your journal and about fifteen minutes. Pull your last ten losing trades. Next to each one, write the sentence you told yourself right before you clicked, as close to the real words as you can remember.
Then sort the sentences. "I need to get this back" and "one more and I am even" come from the Red family. "The whole chat is in this and I am not" comes from the Yellow family. You hear the Green family in "it might come back" and the Blue family in "I want to be sure." One of the four groups will fill up faster than the others, and that group holds the mistake you repeat.
Count the sentences instead of trusting your impression. You may believe you chase hype and find, on paper, that you hold losers. Ten trades give you enough to see the pattern, and few enough to finish tonight.
A named mistake is easier to stop
A mistake without a name feels like bad luck. You call it a rough week or a choppy market. Once you can say "that was the Red trade again," you know the minute it comes from, and you can put the rule in that minute instead of spreading effort across the whole day.
The book follows four traders through thirty-six of these mistakes, nine for each color, each one shown as it happens at the desk. Each part ends with the one rule that held for that family. In the conclusion, Georges Vahanian walks through a full trading day, from the open to the journal, and marks where each family tends to show up.
Start with two minutes
If you want a first read on which family shows up in your trading, take the free DISC Trader test. It takes two minutes, twelve questions, no sign-up, and you see the result at once.
If you want a plan built around the one mistake you keep making, the custom program starts from a sentence in your own words and comes with the MYMOONOVA subscription. The length of the program adapts to your goal.
For one trader's account of what changed once he worked on his own pattern, read The Trader Who Was Sure Coaching Was for Other People. You carry the same habits out of the market, as Why You Skip the Two-Dollar Buy but Miss the Big Fix shows with everyday money.
The book and the test deal with behavior at the desk. Neither will tell you what to buy or promise a result. Both give you a way to see the mistake before you make it again.
Same market and same rule, but a different mistake.