Ep 112: The Top Three Ways to Sabotage Your Trading

This episode focuses on a very important topic: the all-too-common ways that traders sabotage their trading accounts and careers. 

Nope, this isn’t a PSA. We’re not talking about binge-drinking or illegal drugs (but now that you mention it, yes, avoid those things). 

Today, hosts Tim Bohen and Stephen Johnson talk about their respective top three things that they see trip up new traders. Just as there’s value in what you do, there’s also value in what you don’t do. So check out the episode to see what NOT to do in trading. 

Here’s a quick peek… 

Not Having Goals 

If you have a laptop, an internet connection, and $500 bucks, you can make a trade today — maybe even right now (market hours permitting, of course). But that doesn’t mean you should. 

Plenty — probably too many — traders get into trading without taking the time to consider what they’re doing or why they’re doing it. Sure, making money is a common goal. But beyond that, a lot of traders don’t have specific trading goals.

They buy stocks without a goal, a stop, or even thinking about why they’re doing it. Some may luck out and make some money this way. But it’s also possible to lose money … and lots of it. This approach isn’t sustainable and can prove deadly to your account. 

Losing Touch With Reality 

Call it trading karma. The minute you think you’re gonna be successful, you take a big loss and you’re worse off than when you started. 

The ego can be a powerful foe when it comes to getting ahead in trading. It can talk you into believing you’re invincible, and that’s a lie. Even the greatest traders in the world are just one trade away from being humbled at any given time. It’s smart to remember that! 

When it comes to trading, Tim and Stephen both agree that you need to try to stay in a beginner’s mindset. Stay curious and don’t get too cocky. 

Let’s use a sports analogy … There’s always someone bigger, faster, stronger, and tougher out there. So smart athletes should remember to keep their egos in check. Likewise in trading, there’s never a point at which you’ve reached your pinnacle and can’t be knocked down from the mountaintop.

As Tim shares, you’re never done with trading. He’s done it for 12 years, yet according to him, “I screwed up yesterday … I’ll probably screw up again tomorrow.” 

Focusing on the Wrong Things 

Both Tim and Stephen also talk about how focusing on the wrong things as a trader can be fatal to your career. 

  • Quantity versus quality. Things like boredom trading and random trading can happen when you’re focusing on the actual act of trading rather than finding quality stocks to trade.
  • Focusing too much on money can cripple you. Stephen shares that he began trading as a game of probabilities, and it’s usually when he starts staring at the P&L (profit and loss) data that he starts messing up. If you start basing your value on these numbers, you can quickly get lost. 
  • Focusing on making money vs. having a specific trading plan. Tim explains how not having a specific plan before you make a trade can one of the worst trading mistakes. A trading plan should be clean, concise, and clear. If you can’t fit it on an index card, you don’t want it. And definitely have all the details ironed out before you get into a trade. 

Got a Question or Comment?

Do you have a question about trading sabotage … or a story to share? 

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