BIG Mistakes Small Account Traders STILL MAKE!
Summary
TLDRThe speaker emphasizes five crucial points to avoid when entering the world of trading. First, they caution against using necessary funds and high leverage, which can lead to significant losses over time. Second, they advise against the endless pursuit of the 'perfect' trading strategy through courses and books, as even seasoned investors like Warren Buffet and George Soros experience losses. Third, they suggest seeking advice from successful traders rather than from individuals with a 9-to-5 mindset, who may not understand the risks and rewards of trading. Fourth, they stress the importance of focusing on trading psychology, risk management, and strategy during the initial learning phase, rather than getting overwhelmed with advanced concepts. Lastly, they insist on the necessity of having a trading plan and maintaining a trading journal to record and analyze every trade. The summary underscores the importance of doing the 'boring' work and learning from it to become a successful trader.
Takeaways
- 💰 **Avoid Risking Essential Funds**: Do not invest money that you cannot afford to lose, especially when starting out in trading.
- ⚙️ **Be Cautious with Leverage**: High leverage can lead to quick gains but also to substantial losses. It's important to understand the risks involved.
- 🔍 **Avoid the 'Holy Grail' Myth**: There is no perfect indicator or strategy in trading. Even successful investors like Warren Buffett and George Soros experience losses.
- 🏢 **Seek Advice from the Right People**: If you're aiming to build a trading career, seek guidance from those who have been successful in trading, not from those with a 9-to-5 mindset.
- 🧐 **Understand the Role of Losses**: Accept that losses are a part of trading and investing. They should be managed and not feared.
- 📈 **Focus on Strategy and Psychology**: Especially for beginners, concentrate on developing a solid trading strategy and understanding the importance of trading psychology.
- 🤔 **Consider the Source of Advice**: Be mindful of whose advice you take. It's often more beneficial to learn from those who have achieved what you aspire to.
- 🚫 **Ignore the Noise**: Don't let the opinions of others who do not understand your goals or the trading industry deter you from your path.
- 🧠 **Trading Psychology is Crucial**: Often overlooked, trading psychology is a critical component of successful trading. It's not just about the technical aspects.
- 📒 **Keep a Trading Journal**: Recording every trade in a journal is a fundamental practice that can lead to better understanding and improvement over time.
- 📈 **Have a Trading Plan**: A well-crafted trading plan is essential for success. It should include strategy, risk management, and be regularly reviewed and adjusted.
Q & A
What is the first mistake that traders often make according to the transcript?
-The first mistake is putting in money that they cannot afford to lose and using high leverage, especially for beginners. This can lead to significant losses if the market does not go in their favor.
Why is it not advisable to constantly search for the 'holy grail' of trading strategies?
-The transcript suggests that there is no such thing as a loss-proof indicator or strategy. Even successful investors like Warren Buffett and George Soros experience losses, indicating that losses are an inherent part of trading and investing.
What is the third mistake traders should avoid?
-The third mistake is listening to advice from people who are not in the trading business themselves, such as relatives working 9-to-5 jobs, as they may not understand the risks and rewards associated with trading.
Why is focusing solely on technical indicators insufficient for a trader's first year?
-The transcript emphasizes that new traders should focus on their strategy, risk management, and trading psychology during their first year. Learning too many technical indicators and strategies without understanding risk and psychology can lead to poor trading decisions.
What is the importance of having a trading plan and keeping a trading journal?
-A trading plan and journal are crucial for tracking and analyzing trades, which helps in refining strategies and managing risks effectively. They provide a record of decisions and outcomes, which can be used for learning and improving future trades.
What does the speaker suggest about the perception of high leverage in certain cultures?
-The speaker mentions that in some cultures, not using high leverage can be seen as a sign of cowardice, with a pressure to use leverages as high as 1:400. However, the speaker warns against such practices due to the increased risk.
Why is it important to seek advice from successful traders or business people?
-Seeking advice from successful individuals in the trading or business field can provide valuable insights and practical knowledge that is directly applicable to building a trading career, as opposed to seeking advice from those with no experience in these areas.
What is the significance of risk management in trading?
-Risk management is critical in trading as it helps to limit potential losses and ensure that traders do not risk more than they can afford to lose. It's an essential component of a trading plan and is often overlooked by beginners.
Why is trading psychology important for a trader's success?
-Trading psychology is important because it deals with the emotional aspects of trading, such as discipline, patience, and the ability to handle stress and uncertainty. It can greatly influence a trader's decision-making process and overall success.
What does the speaker suggest about the role of fun and enjoyment in the trading process?
-The speaker suggests that while trading may not always be fun, especially when it involves the 'boring' aspects like risk management and trading psychology, the discipline to focus on these areas is what separates successful traders from those who lose money.
What is the final piece of advice given by the speaker for someone starting in trading?
-The final advice is to not trade without a plan and to keep a trading journal. This helps in tracking progress, learning from mistakes, and refining strategies over time, which are all key to long-term success in trading.
Outlines
🚫 Avoiding Common Trading Pitfalls
The speaker emphasizes five crucial mistakes to avoid in trading to prevent significant losses. They caution against using money that is essential for survival and warn against the dangers of high leverage, especially in cultures where it's considered a sign of cowardice not to use it. The second point is about the futility of endlessly seeking the perfect trading strategy through numerous courses and books, highlighting that even successful investors like Warren Buffett and George Soros experience losses. The third point addresses the issue of seeking advice from people who are not in the trading business, which can be counterproductive when building a trading career. The fourth point is about the importance of focusing on trading psychology, risk management, and not neglecting these aspects in the learning process. Lastly, the speaker advises against trading without a plan and a journal, stressing the importance of recording every trade for analysis and improvement.
📈 The Discipline of Successful Trading
The speaker concludes by stressing the importance of discipline and hard work in trading. They contrast the current need for focused effort with the future freedom to enjoy leisure activities once success is achieved. The speaker encourages viewers to dedicate time to strategy development, backtesting, and learning rather than seeking immediate gratification. They end on a note that emphasizes the current phase as a period for work and preparation, not for play, and sign off with a promise to continue the discussion in the next video.
Mindmap
Keywords
💡Leverage
💡Loss-proof indicator
💡9 to 5 job
💡Trading psychology
💡Risk management
💡Sentiment analysis
💡Intermarket analysis
💡Trading plan
💡Trading journal
💡Boring stuff
💡Work-life balance
Highlights
Avoid putting in money that you need, as many people make the mistake of investing desperate money in their first year.
Opening an account with high leverage can be dangerous, especially in cultures that encourage it.
High leverage may earn a lot of money instantly, but it's risky in the long term.
Avoid constantly shopping for courses, books, and strategies to find the 'holy grail' - it doesn't exist.
Even successful investors like Warren Buffett and George Soros experience losses, showing that losses are part of trading and investing.
Don't listen to advice from people working 9-to-5 jobs if you're trying to build a trading career.
Seek advice from successful business people, not those in corporate jobs, when starting a trading business.
Ignore comments from others who may not understand the risks and rewards of trading.
Focus on trading strategy, risk management, and trading psychology in your first year, rather than technical indicators and sentiment analysis.
Risk management and trading psychology are often overlooked by beginner traders.
Trading psychology is not a 'sexy' topic, but it's crucial for long-term success.
Don't trade without a plan and without keeping a trading journal to record every trade.
Successful trading involves doing the 'boring' tasks like learning, taking notes, and backtesting strategies.
The key to becoming a successful trader is putting in the time and effort, even when it's not glamorous.
Focus on working hard now, and the rewards like shopping and entertainment will still be there later.
The speaker emphasizes the importance of avoiding common mistakes to prevent losing money in trading.
Transcripts
I need to talk to you avoid these five
things otherwise you're going to lose
everything number one you put in money
that you need and a lot people not only
put in Desperate money in their first
year they also open an account with
super high leverage I've spoken overseas
outside of Singapore okay I'm not going
to mention which country there are
certain cultures if you're not using one
is to 400
leverage you are a coward are you sure
you want to play with Mr market like
that because I can tell that it's not
going to end up so well in might workout
right now maybe for the first month
second month oh yeah High leverage ear a
lot of money instantly try again next
month try again in the next 6 months see
whether account is still there or not
second thing you should not do ever is
to go around call course shopping like
you go to all these events it's fine
because you can Network and learn from
people but if you go to all these events
buy all these courses buy all these
books to find the loss proof indicator
strategy you're not going to find it
you're not going to find it Warren
Buffett once in a while he appears in
the news okay where he loses money in an
investment okay the media publicizes his
losses why is it that he still lose
money once in a while why is it that J
Soros doesn't make money in all his
traits why is it that none of them can
make money all the time it's because
losses are part and puzle of trading and
investing third thing you shouldn't do
why are you listening to people who are
working a 9 to-5 job like you're trying
to build a career in trading right a
trading business right why are you
caring what your relative cousin is
saying when he she is working a 9 to5
job I don't know about you but if I am
looking to become a successful business
woman who do you think I should seek
advice from tell me tell me I should go
find a successful business woman or man
and learn from him or her right does it
make sense to you that I go to a random
guy or girl working a corporate job and
be like excuse me can you teach me how
to start a business the first thing
they'll say you want to do that risky
stuff what if you don't earn money from
it what if your product fail what if
your customers don't buy from you what
if you become broke I get it it's hard
like sometimes your husband or wife be
like it's either
trading or
me choose one sometimes people can be
conservative and you cannot blame them
because they grew up in the industrial
revolution there's no Tik Tok no YouTube
no Facebook you know where job stability
is the thing what's the thing what's the
thing even though my parents they're
very accepting because they stock
investors but not all my relatives are
that accepting it's hard to ignore other
people's comment because sometimes
whatever they say it means a lot to you
and sometimes it might hurt you I
understand how it feels because every
day I deal with comment first thing
I shouldn't do is to ignore trading
psychology risk management and also fun
analysis sentiment analysis and Inter
market analysis now I know that in the
first year learning fa sentiment and
Inter Market is a little bit too much so
in your first year just focus on your
strategy risk management and trading
psychology the problem with most
beginner traders in their first year all
they learn is what technical indicators
strategy trading system and then a chart
even if they do learn risk management
they just learn a little bit here and
there a leverage margin just over
leverage doesn't matter trading
psychology is also boring for some
people it's not a sexy topic I didn't
sign up for psychology classes tell your
boss to take you back trading is not for
you I'm saying this not to piss you off
but it's because I don't want you to
lose money you think I purposely want to
be rude number five don't trade without
a trading plan and without a trading
journal
just buy any notebook and record down
every single trade if you don't want to
buy a notebook just record down onto
your Microsoft Word document just keep
life simple when I first started off in
trading it's just a blank notebook like
this so I realize that the things that
will make you a successful Trader are
doing the boring
stuff doing the boring stuff putting the
time to learn take notes recording down
trades crafting editing your trading
plan strategy back testing nobody likes
staying at home doing all this stuff
when you can go out there and party
watch movie shopping right but when you
become successful the shopping center is
still there the cinema is still there
right now it is no play time right now
it's time to work okay so with that I'll
talk to you in the next video bye
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