Trading Tips and Risk Management: The Greatest Threat to Your Trading Account

Okay, so there's always this talk about risk management and trading when you know, of course it's an important matter. You know, guarding your, guarding your account. You don't want to risk, you know, too much money. You don't want to lose too much money. And that's the whole point of risk management is avoiding losses. But one area of risk that a lot of traders overlook, and it costs them an insane amount of money, that's probably the greatest risk to your account. Now, a lot of traders think that, you know, it's your emotions. That's your, you know, that's your biggest risk. You know, of course, you got greed, fear, hope and despair that are always going to be messing with you and taking your profits, causing you to do things that cause you to chase trades or hesitate or make other mistakes that cost you money. But really, your emotions are not your biggest liability. They're not. There's no point in denying them or trying to fight them. They're part of who you are. Dealing with emotions, it is an important matter. And we'll talk about that in a different video. But what we're talking about right now is an even greater risk. And it really is. And this came to light for me several years ago when I first started helping traders. And, you know, people were coming to me for help with, you know, trading psychology. And I, you know, I would work with them. And, you know, when I first started doing this, you know, we explored different schools of thought regarding psychology because, you know, there are different schools of thought. You know, you got Adlerian psychology, you got behavioral psychology and, you know, talk therapy, gestalt. There's all kinds of, you know, schools of thought within the psychology realm. But what I found when I started, you know, really exploring all this stuff and a couple people, you know, that were really struggling and one guy in particular. Well, actually, one whole period, it's like hesitation was the theme everybody was fighting hesitation. Anyway, when we explored this, what I found really interesting was and, you know, exploring everything we could think of, you know, that would be causing self sabotage or, you know, whatever their emotions to flip, you know, mommy, daddy issues, all that kind of stuff. What I found was that, you know, almost everybody that I'm talking to, they don't really have serious issues. They don't, because if they did, they wouldn't be in a position to trade in the first place. I mean, if you think about it, if you were so bunched up about success or money or, you know, your relationship with money or, or discipline or any of that kind of stuff you wouldn't be in a position to trade. You just wouldn't be able to amass, you know, 10, 20, 50, $100,000. It just wouldn't happen because your, you know, whatever your issue, you know, psychological issue you have would prevent you from doing that. So it's not some big psychological issue. You've been able to achieve success and you're obviously okay, at least to a sufficient degree with all these other things. And that's what was bugging me is because it's like, you know, exploring all this stuff and it's like, man, it's just not there. Now, of course. Do people experience childhood trauma? Yes. I don't know anybody. Anybody that's grown up throughout childhood that never experienced trauma. It's just part of being a child. You're in a world you don't know how to deal with. Things happen and you're like, ah, that's a bad shock. Okay, yes, everybody has childhood trauma to deal with, but most of us have dealt with it. So again, it's not like there's something that your mommy said to you when you were 5 years old that's going to ruin you for trading. You know, you can be successful elsewhere, but not trading, you know, because mom said you're going to be a bad trader, you know, you just won't make it as a trader, you know, whatever it is. Anyway, yeah, I'm joking. But you know, a lot of people think it's like, yeah, gosh, there's something wrong with me, you know, I must have some deep psychological issue. That's not your biggest risk. What I found in working with everybody was again, you know, this is, this is an above average group. You've achieved, you know, an above average level of success, shown that they have above average character traits and habits and work ethic and all that kind of stuff. So what was really cool was discovering that really it's like, no, you don't have psychological issues, you have lack of training issues. And that really got brought to light because I got to think about it from the Peter Principle. And that was one of the biggest things in the Peter Principle, the book where he was trying to figure out why people would rise to the level of incompetence within a company or any hierarchical organization and then remain at that level of incompetence. Well, it's because people, when they would get put into a job and they didn't have sufficient training and they didn't naturally have the skills for that job, that's where they would hit their level of incompetence. And for traders, trading is not an easy occupation. It's not as easy as it looks. It requires certain skill sets and if you don't have the skill sets, if you didn't get properly trained for this job, it's going to be rough. And it's just not an occupation that lends itself to just being figured out. So really it's not psychological issues or your emotions that are your biggest liability, it's ignorance. Now, ignorance doesn't mean you're stupid. It just means that you haven't received sufficient and adequate training to do this job properly. I mean, think about it. You've probably in your life, you know, had some jobs that were pretty challenging, required, you know, level of skill and understanding and know how and you were able to master them. And when you, you know, when you did and you knew what you were doing, the job was fine. You know, you went to work, some days are better than others, but for the most part, yeah, you just go do your job, you go do your thing and everything's fine. Well, trading really should be no different. And it is. When you get the proper training and you're coming into it properly prepared, you have the skills so that you know what you're doing, you know that you know what you're doing, and then it's not this big emotional ride because again, you have a handle on it. The biggest problem traders have, again, is the lack of training. That's your biggest risk. It really is. It's the lack of training and thinking that you can just figure this out and somehow magically, one day everything's going to turn around. That's the biggest risk. And I know for me, when I was, you know, my first year of training, trading, yeah. I was sitting there trying to, you know, train myself, learn it on my own or, you know, from my broker who didn't really care. And it's like, yeah, I'm learning from somebody that doesn't know how to trade because I didn't know. And my broker, again, he didn't care. So I was my own limitation. I didn't know what I didn't know and I didn't, you know, I couldn't see what I couldn't see. I didn't know what my blind spots were and the gaps in my training. I didn't know that there were actually skill sets you needed for this. I mean, it looks simple enough, looks straightforward enough, right? You know, get a strategy, execute the strategy. No, and the whole notion of, you know, all you need is a strategy and get your psychology right, you know, figure out your mommy daddy issues and you'll instantly become a consistently profitable trader. You're still missing the skill set. So if you've been at this for a while and you know, you find that yes it's challenging, it's more challenging than it should be to make consistent profits. Understand it's probably the skills that you, that you haven't acquired yet is the reason that it's difficult and that you're not seeing those consistent profits. And so if you'd like some help with it, you know, swing by Inside Out Trading. I got free resources there to help you, you know, gain the perspectives and some insights into what's, you know, what you're missing and help you figure out, you know. Yeah. What it is, what you're missing, what you need to fill those gaps so that yes, now you can come to this occupation and you do have a solid handle on it. You can trade consistently and comfortably, not fighting your emotions. Like I said, no more challenging the more challenging than any other job. And that's really how it should be as far you know, from an emotional standpoint. So anyway, I hope this has been helpful. If it has, you know, give me a like down below, subscribe to my channel and so you know, you get notified when I publish these videos every week and also my podcast but and also you know, if you have friends of trade, go and share with them as well. You know, you want to see them succeed and so share, share it with your friends. Anyway, again I hope this been helpful. Oh and real important, one of the first things you got to do if you're wanting to, you know, change maybe you know, how things been going isn't so great. First thing you got to do is break the cycle. You know, interrupt what's been what the pattern that's been established. Swing my inside out trading.com pick up a copy of Break the Cycle, a list of things, 10 things that you can do within 20 minutes. Actually 19 to help break the cycle of, you know, making money and losing money. So yeah, swing by Inside Out Trading, pick up a free copy of Break the Cycle. Anyway, again I hope this one helpful share it with your friends. Give me a like and a subscribe down below. We'll talk to you soon. Cheers. Sa.