Steady Trade Podcast Episode 21: How Stephen Johnson Blew Up His Account

Welcome to the new format of the Steady Trade Podcast! After two fantastic seasons, we’ve listened to all of your comments and feedback and are moving toward a new model with the show. From now on, Steady Trade Podcast episodes will be released on a weekly basis, so that you can keep it steady without extended breaks!

To kick off the new format, our latest episode reveals a cautionary tale inspired by real-life events: a little story we like to call Stephen Blows Up His Account. While initially hosts Tim Bohen and Stephen Johnson had a different type of episode planned, when this unexpected event occurred, they made room for discussion about this all too common trading pitfall. After all, many a trader has experienced his or her account detonating right in front of their eyes, but it’s a surprisingly little-discussed topic.

Blowing up your account.

Don’t worry: physically, Stephen is OK (well, you know, aside from the copious amounts of alcohol he drinks). To say that his account “blew up” doesn’t mean that there was an actual explosion. Rather, it means that his account was totally depleted through an unfortunate series of events. In a nutshell, Stephen took a thousand dollar account to about 50 dollars, taking a huge loss that wiped out pretty much all of his capital. As Tim observes, Stephen even mentioned in the past that he was going to experiment with 1k and even said “if I blow it up I blow it up”–unfortunately, his flippant remark turned out to be prescient.

Blowing up an account: how does it feel?

Picture this: you are riding your bike down a hill and gaining momentum. And then you crash…but you crash into broken glass, then fly off a cliff. Did we mention it was the same day your romantic partner left you for your best friend? That’s how it feels. While Stephen can joke about it now, it’s undoubtedly a terrible feeling to lose everything so rapidly.

However, there is a silver lining to this situation. True, Stephen lost a thousand dollars, which is a sizeable sum. However, talk about a lesson that will stick with him! If Stephen hadn’t lost the money and had continued to make the same mistakes, he could have fallen into the common trading trap of believing himself to be invincible, and potentially could have suffered a much bigger loss later on.  

What blows up accounts?

In the show, Stephen tells his sad story of loss and lament, detailing how one bad decision led to another and left him in the poor house. Unfortunately, while he started with a trading plan, loss led him to make poor decisions that found him “chasing” a win, even against his better judgment.

In retrospect, Tim and Stephen are able to talk specifically about what went wrong and about how Stephen fell into a trap. Stephen describes it like running with all of your might into a Game of Thrones-like impermeable wall. Sure, you might be able to run into it, but the wall has more resistance than you. And well, he lost his money. Nope, he didn’t get through that wall.

Back to the plan.

As the hosts discuss Stephen’s loss, they begin to discuss the specific stock and circumstances that led to his loss. Unfortunately, hindsight proves 20/20 here, and it’s easy to see in retrospect how Stephen could have done things differently.

In going through what went wrong, it’s pretty easy to determine what happened in Stephen’s situation. Everything was very obvious. However, sometimes it takes something really bad to happen for these lessons to ring true.

They discuss how it is that errors like this happen, and how your personal leanings can play into the trade decisions that can make you suffer losses They also talk about how Stephen really does know better, and how he can use his spreadsheets, journals, and experience to move forward differently. Learn from Stephen’s mistakes so that you never have to suffer this kind of loss!

Thanks for tuning in to the new, serial format for the Steady Trade Podcast! Stay tuned for weekly episodes covering every aspect of how to be a steady trader with long-term, reliable success!

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Also, Have you ever blown up an account!?