L5.1 — Categorising Your Mistakes: A Taxonomy

Trading mistakes fall into three categories: analysis errors (incorrect structural read), execution errors (correct analysis, incorrect trade action), and management errors (correct entry, incorrect exit or stop behaviour). Each category has different causes and different fixes. Conflating them — attributing an execution error to analysis, for example — produces the wrong remedy.

For each loss in your trade log, assign it to one of the three categories or to "variance" (correct everything, adverse outcome). After 30 trades, the distribution reveals where the largest improvement opportunity exists. Most traders find that execution and management errors significantly outnumber analysis errors — the problem is rarely the analysis.

The three categories also map to different interventions: analysis errors require more study or a stricter structural filter; execution errors require a stronger pre-entry checklist; management errors require a stricter exit rule. Knowing the category drives the correct intervention. Generic "improve your trading" is not a fix. "Reduce premature stop movement by requiring a structural level change before moving the stop" is a fix.