Why Traders Intentionally Make Mistakes

Hi, Brian McAvoy with Inside Out Trading here. And today we're going to talk about a rather interesting subject, and that would be why traders intentionally make mistakes that cost money. Yes, real mistakes, not things done with the intention of testing an idea or for any particular learning. We're talking about intentionally doing things that are against the system or discipline or within one's rules, the trading rules and risk management rules. Here's what I'm talking about. I believe it was probably May of last year that I got a call from a guy who had got my course. And at first I was really surprised. He impressed me because he gets on the phone and he 70 years old or older. But anyway, he had started on a soybean field, worked his way up where he was managing several farms, worked on the docks, shipping soybeans, actually worked on one of the boats, bought and sold the lots as a broker, a field broker, if you will, worked on the floor as a trader, worked for a broker, an introducing broker. And so the guy. And also as an individual broker for the last 14 years. And what I found interesting was he tells me, he says, yeah, I've done just about everything you can do in the industry. Everything you can think of surprised me because after the guy got done telling me all that, I figured he'd be calling to ask for a refund. I mean, the course is written primarily for traders who are still new or relatively new to trading, up to, say, five, maybe eight years experience, people who are still not at the professional status and struggling, fighting some issues. That's who the course is for. And so for this guy to tell me that he's got 50 years in it and 14 years as an experienced trader, particularly a day trader, and he's sitting there telling me that he's thanking me for the course. And I asked him, I said, really? He said, yeah, because it got me back to a lot of things that I'd gotten away from. And I said, really? And I said, so how's your trading going? And he says, oh, not very well. He says, I've been trading from home for about 14 years and I have yet to have a year where I've made money at the end of the year. Actually, most months I'm losing money, most weeks I'm losing money. I'm like, you got to be kidding me. I said, you know the business, you know how to trade. He says, yeah, I know. He says, I've tried just about every system there is out there. And I said, so how is it that you are not just Kicking back, enjoying a lot of profit. And he said, well, I trade the way I trade because it's exciting and I really enjoy it. I look forward to getting out of bed every day and getting over in front of the computer. And I'm like, yeah, but okay, so have you tried any of these other systems? We talked about things like buying and selling options, various complex strategies, trend following, all sorts of different strategies. And I says, yeah, I've tried them all. But he says, I like what I'm doing because I enjoy it. It's fun. And I said, yeah, but he said, your wife still works, right? And she's over 70. He says, yeah. He says, yeah, I don't know how long she's going to let me keep doing this because, you know, sooner or later I'm going to run out of money. And I said, well, so what are you going to do about it? He says, I don't know, I guess I'll change when I have to. But I thought it interesting because it occurred to me afterwards, here the guy is, he knows what he's doing. He's no rookie by any means, but he's trading and he's knowingly and intentionally doing things every single day that cause him to lose money. He will place it. His system calls for stop. He'll place trades without stops almost every day. He'll make bigger trades than he's supposed to. He'll go against the technicals, he's making a whole slew of mistakes. And he's doing it knowingly and actually intentionally. I mean, if you do something knowingly, you can't really call it an accident. That's why I said intentionally. Because if you do something and you're very well aware of what you're doing, you can't claim it's an accident. But as I've talked to other traders, and I know from my own experience, people actually do. Traders actually do intentionally make mistakes. They're not accidents. Trades will move against you, the market will move against your initial position. From time to time that happens. But we're talking about doing things that are just playing against the rules. And you know it and you pay for it. So the question is why? Why do people do that? And as I thought about it more and more, it makes actually a lot of sense. Because if you think about it, I mean, why did you get into trading in the first place? What was one of the appeals of it versus some of the other investing opportunities that are available? And there are tons of ways to make money if you've got Money. So part of it is the risk, the not knowing, the suspense. Rather than just fast forward to the end, it's because it's not the end result that satisfies a certain part of you. A certain part of you lives for the suspense and the anticipation and the not knowing and the excitement of all. And that part of you is what is causing you to. It's one of the reasons that you're making mistakes. You're doing things against your disciplines, your known best practices. Because if your system calls for stops and you go ahead and place a trade without stops, now you have some excitement. And that's feeding that part of you that wants the adventure and the excitement and not knowing. And that's a real danger. But it's something to be aware of. Because if your intention, your conscious, sober intention, is to make money, but you've got part of you that's sitting there saying, no, I want some excitement, I want some adventure, I want some action, then you need to be aware of that and maybe take a look and see if you need to find another way to satisfy that part of you so that it's not being taken into your trading. Here's what I'm talking about. This was just a couple weeks ago. I was talking with another trader and we were having this conversation, and he said, yeah, that's exactly what I'm doing. He said, my life is just boring as heck. He says, I go to work, my job is okay, I like my job, but yeah, it's nothing exciting. And, you know, I come home and I hang out with the family, go to bed, get up and do it again the next day. And the weekends are pretty quiet. Yeah, I lead a fairly boring life. I said, well, so what do you think you ought to do? And he said, well, I'm going to. Finally, he says, you know, there are some things that I've wanted to do that would provide that excitement for me. I just wanted to get my pilot's license, jump out of airplanes, make the whitewater rafting. I mean, there are a lot of things that a person can do for that, that adrenaline desire that a person has. So what he's going to do is he's going to start pursuing hobbies that fill that need for excitement and adventure and fun so that when it comes time for trading, he's okay with being bored. Because if you think about it, really good, solid trading is not exciting. I mean, it can be exciting if you really get into just being good at it. And that satisfies you. You just really excel at just being a cool running machine. But otherwise it can be pretty boring. And the first guy that I was telling you about, the one who's been trading for 14 years and losing money, he said that straight out. He said, I don't want to do those. I don't want to use those other strategies because they're boring. And if you think about it, if you've got a well planned trade, you've got a good setup, you plan it right, you enter it right, you don't have any surprises because you know what you're going to do when the market comes up. There's no excitement in that. It's boring. I mean, making money is pretty cool, but doing it well can be lacking the excitement and adventure that part of you desires and that part of you is part of you. No point in denying it or fighting it. Just find a better outlet for it than in your trading. So I just wanted to share that with you. Some food for thought. If you find though that you're fighting other struggles in your trading. There are some things that people run into when they first get into trading that really do trip them up. Smart and successful people who are just outstandingly successful and very methodical and smart in what they do outside of trading, when they get into trading, there are certain things that happen that do trip you up. So if you find that what we've talked about tonight, maybe that's there, maybe it's not. But you have some other issues, some things that are keeping you from succeeding and you're trading and you can't figure out what they are. Maybe ought to swing by the subtletrap.com and check out the course because there are certain things that happen that do trip people up. And I would just love to help you work past those issues and get on to good, sound, profitable, consistent trading. Again, it's Brian McAvoy with Inside Out Trading. Have a great day.