5 Trading Mistakes That Will Make You Broke (AVOID THESE)

Top 5 Investment Traps

[00:00:00] Michael: Are you ready to break the cycle of trading losses and step into the league of consistent and profitable traders? This isn't about quick fixes. It's about mastering the market with knowledge and discipline. My goal is to empower you to make informed decisions, manage risk wisely, and achieve sustainable success in trading. One thing I will say though, before we get into all of this, is you're somebody who can't take a couple of minutes just to sit down and learn something that can possibly change your life.

[00:00:29] This video may not be for you. There's so many videos out there that have got animations everywhere and it's flashing and it's banging. I got caught up in the lure of it. Look at some of my other videos. MrBeast is the most popular YouTuber, so I felt like I had to make videos like him. And then I was just thinking one day,

[00:00:46] I was like, wait a minute. My seven year old loves Mr. Beast, but my seven year old ain't got no money and he's not somebody who should be watching my videos because I can't help him. He's not my core audience. So I should [00:01:00] be trying to make videos that appeal to seven year olds or people with seven year old attention spans.

[00:01:05] My main goal here is to help you break those generational financial curses. And we're going to have to do that by slowing things down and stepping through this like we're in a course. So get your notes out and get ready because we're going to talk about the top five mistakes that new traders make,

[00:01:22] The number one mistake that new traders make is they jump in with zero education, jumping into stock trading or economics or any of this stuff without any kind of education is like trying to fly a 747. without taking flying lessons and getting some hours under your belt. I don't want you to end up like them.

[00:01:41] So I got a cheat sheet right next to him. Not going to even point. Cause I don't even know which side is going to end up on, but on this sheet, I'm going to give it to you at the end. So don't worry, but take notes. If that helps you follow along. But the actual bid, ask, and spread are these basic terms that we need to understand, right?

[00:01:59] So when I think about [00:02:00] bidding, ask, I just take it back to like cars. I love to haggle and negotiate. So the asking price is the sticker price for that car. So I want a brand new car and the sticker price is 30, 000. Well, the bid is me saying, uh, I'll take it at 25 because it's been sitting there for a little while and nobody's bought it.

[00:02:18] So I'm gonna take it at 25 and they're asking, you know, 30, 004, then the spread is that different. So the spread would be 5, 000 and the spreads also going to help me determine the supply and demand in the market. Another thing that the spread does is help brokers and market makers make money. We don't have to go that deep.

[00:02:37] I just want you to understand. Bid and asking the spread being the difference between the two. Those are key terminologies just to get your education started and to get you a couple of levels above people who aren't even looking at things. So when I buy a stock, like I ain't trying to buy the ass price.

[00:02:53] I'm trying to buy. I'm sure to place a bid and jump in and get it for the price that I want, even with the limit order. [00:03:00] And that'll allow me to build my trading plan and actually know how much I'm going to lose or make because I'm not taking the market or the ask price. I'm setting a bid price.

[00:03:09] That's based on my own plan. Then, of course, we need to understand what a bear market is, what a bull market is, and the market conditions to understand these general trends, right? Are we in a bear or a bull market? If I was to ask you right now in the comments, tell me, are we in a bear or a bull market?

[00:03:27] What do you think? This could be a trick question, but let me know in the comments, if you think we're in a bear or bull market, but this is very important because this is actually going to inform you of what sectors to trade and what securities to get into. Or if you need to be into more conservative stuff or we're into more risk stuff, this is super important,

[00:03:46] bear or bull market, right? And. I didn't explain it, but I think most of you may know bear market just means that we're kind of like a bear and we're expected in the market to go down based on economic events that we talk about [00:04:00] on this channel every day, or we're in a bull market, money's flowing everywhere.

[00:04:03] And we think the market is going to go up and we're game. He is strong, like bull, right? That's what we think about when we're looking at those two terms. And then we've got to think about our basic trading strategies as well. So you got day trading and this is, it's funny, right? Because a lot of people come in and they get in and they start day trading because they see people with lamb bowls and making all this money day trading without realizing that a lot of those people that are making that money are making money off the courses and communities that they've built to teach you how to day trade.

[00:04:36] So don't get caught up into that day trading trap and feeling like you need to just be a day trader. On the charts like crazy. Many years ago, when I first jumped in, I thought that's what I had to do. I had to day trade. And I had kids and I had a day job and I was doing all this stuff.

[00:04:51] And man, I remember sitting at my computer and like my palms were sweaty, you know, throw up on my shirt, mom's spaghetti. I was super nervous and [00:05:00] I was jittery cause I couldn't catch the trade. And I knew that it was going to move against me cause I was trading on one or five minute charts in my, Daughter was pulling on my leg and my son was doing something and my wife was calling my name and It was just insane.

[00:05:11] Keep it in mind that also live in australia. So It is around this time at night that the market actually opens. Or if I'm trading Europe, it's around dinner time when my kids have just gotten home and they want some daddy time. So it was hard as heck trying to day trade Forex, just as I thought that's what she was supposed to do.

[00:05:30] The super important thing about these strategies is that you need to find a strategy that fits. Not just your personality but your lifestyle as well Like i'm somebody that can when i'm by myself take on a lot of risk and I do move fast and stuff But hey, man, I got a family. I got wife and kids Day trading does not work for me unless maybe i'm traveling or I catch a move and i'm doing options or something But in general day trading does not work for me.

[00:05:55] That's buying and selling within the same day Or our, like for me, I'm [00:06:00] more of somebody who prefers to jump in and hold my positions a little bit longer. And I'm a swing trader. So I'll look and I'm like, okay, I'll give you an example. I'm like, okay. I, before Amazon earnings, I'm like, I know earnings are coming up.

[00:06:14] There's going to be some volatility. I'll get a leap, which is a longterm dated option, which we can talk about in later videos. And I'm just going to ride it out because I have a thesis of what this stock is going to do on the bullish side. Based on my belief of them as a AI compute and cloud services company,

[00:06:32] I bought contracts that were a month out, right? Normally I do like two weeks, but a month out in this case, and it ended up making me a pretty penny, but that is swing trading. And that's something that if you don't have a lot of time and you want to kind of set it and forget it or place limit orders, swing trading is going to be great for you.

[00:06:49] You just got to find something that actually fits your lifestyle and what you're trying to do.

[00:06:54] Another strategy is going to be scalping. So that's when you go in and you're making numerous trades and you're trying to profit [00:07:00] within those small price changes. It's like a dopamine hit. You're trying to get a pip here, a point here. I'm trying to grab this. I know this is going to happen. So I'm taking a little bit here and you're just trying to get all these little trades and you think it's going to add up to a lot of money.

[00:07:11] This is what a lot of the YouTubers and stuff that you see, there are scalpers and they're making their money there. And they're on the one minute chart and they got all buzzed up. Yeah. Like losing their friggin minds showing you how to scalp and you think you can do that yet you have a whole situation At home where that does not work for you.

[00:07:30] Don't get me wrong. There's nothing wrong with it I'm just trying to show you These different strategies so you understand what they are But also give you some additional insight into why or why not it may work for you And then I always like to give you guys additional value. So I look at some of these recommended books.

[00:07:46] Like it's a great one. The beginner's guide to the stock market by Matthew crater trading for a living by Dr. Alexander Elder is another great one as well. Like even to this day, I find myself on investopedia just trying to look at [00:08:00] more like advanced options. Terms or just digging in when I'm going through a balance sheet and I see something.

[00:08:06] I'm just like what the hell does that mean? Because they got they come up with new terms every day So investopedia is great for that type of stuff and then I use trading view for my normal charting software . So that first mistake is people just coming in and not getting educated and doing what you're doing right now by hanging out on this video, looking at the slides, hopefully taking notes and really letting this stuff soak into your head.

[00:08:32] So you don't lose all your frigging money though, this is a doozy. This is one that. Where people just blow up accounts, lose all their money and just say, Hey, trading's not for me. You got it, chief.

[00:08:44] Because they'll come in and not understand what proper risk management is. And they think it's like, I'm in Vegas. I'm about to put all alone black and I'm about to give me a Lambo tomorrow. Matter of fact, I'd already called the Lambo dealership and said, I'll take one in green with peanut butter guts, right?

[00:08:58] It's [00:09:00] nuts. They don't understand rich management at all. So many people do this, especially the scalpers and day traders. It's super simple, man. Do not, do not, Okay. Put all your cards on the table. Like you see my other videos, I recommend you establish a solid baseline by just beating inflation by using ETFs and boring stocks to give you dividends before you even get into this fancy trading stuff.

[00:09:25] But if you're past that point and you want to keep going, you got to understand risk management. So the way that I kind of do this is that I'm like, okay, like how dangerous Is disposition that I'm getting into. Like I like to trade options. I'm trying to come up real quick. I know that options are a little bit dangerous.

[00:09:43] So I'm looking at my portfolio I'm going to say, okay, I'm only going to take 5 percent of that money to actually trade in options. That keeps it super simple. When I'm looking at something like options, that's only because I'm a little bit more confident, but when it comes to like Forex and that [00:10:00] crazy thing and that market net volatility, when you're looking at trading us 30 and not 100 I might say, Hey, one or 2 percent of my portfolio or the pot that I'm willing to trade. I'm going to put into this because Hey, these streets is tough. It's dangerous out here in the Forex land, or it may just be a more volatile trade. I may be trying to come up and do something stupid, but I'm only going to risk 1 percent of my total account.

[00:10:25] So it really doesn't matter because it's not going to wipe me out. If I do that, and that's all about position sizing. So slow down, take your time. Don't be in a rush and be like, okay, I'm going to jump into this thing, but I'm actually going to think about what my position sizing is based on the risk of that asset.

[00:10:46] Right? So for me, like I said, if I'm looking at stuff and I have my portfolio, The majority of it is going to be in boring stuff. I'm going to be looking at VOO, which is like the total S and P 500 indexes, my general savings account. And then [00:11:00] I'll be looking at some other dividend plays on trustworthy companies that I believe in that are going to be still around no matter what happens in some of my other money, then the trading stuff is just.

[00:11:11] money that I can lose, but the cool thing about that is that I don't have that pressure of having my palms all sweaty and heart beating like crazy when I'm going in and I'm investing using that position sizing because I've already shrunk it down. I'm only willing to risk what I can't afford to lose.

[00:11:31] And This should go without saying, but diversification is super duper important. I think everybody knows that we need to be able to come in and spread our investments across various sectors and asset classes. That's what I've talked about before. We were looking at ETFs and safer stuff, or I'm looking at tech, or I'm looking at healthcare, or I'm looking at infrastructure, like hot tip, you hung around this long, one key thing I'm looking at right now is AI infrastructure.

[00:11:56] So I'm talking about data centers. [00:12:00] And places that house some talk about data centers and cloud services providers that actually house the servers that have all the computers for AI. I'm also looking at energy, right? Somebody needs to solve the energy crisis created by AI as well.

[00:12:17] So those are things I'm looking at to diversify and spread out my risk.

[00:12:21] Then, of course, we're going to talk about risk management tools. I talked about limit orders when I was mentioning bids and going in and actually buying it at the price that I want, but a stop loss order is super important. And this has saved my butt so many times because what a stop loss allows you to do is to set that line automatically that says if it goes above or below this point, that means I'm wrong.

[00:12:44] That's okay. That's part of your trading plan. You need to know when to hold them and know when to fold them. So if you set that stop loss is going to automatically sell and get you out of that position. So you don't end up in trouble and losing more money than you anticipated [00:13:00] losing. And risk reward ratio is huge as well.

[00:13:02] So when I'm looking at it, I'm aiming for a ratio where the expected reward is higher than the risk. When it comes to forex, this is even more important. But even when I'm just trading anything, like it's super silly. And that's why, Scalping kind of confuses me because a lot of times those risk rewards are one to one so I can just lose all together Where there's so many opportunities where you have a asymmetrical upside.

[00:13:26] That's what I like trading and that's what I love doing personally So remember, it's always super important to have a risk management plan and to set a stop loss. Please don't make these same mistakes that I made. I've done this. I've not had stop losses and lost all my money in accounts because I was so strongly in belief of my strategy and felt like I was going to hit big and make a ton of money.

[00:13:49] Set a stop loss. Use proper risk management. The next huge mistake that people make is trading with emotion or emotional trading. Revenge trading is the biggest one here where it's just Oh, [00:14:00] I lost money in the markets. I'm going to go back in there and get my money back right now. Like you can't wait to get on the computer and you want to go in and revenge trading.

[00:14:07] You're super emotional. Like you have to control yourself. State when you're going in, you're actually trading it. You need a calm, clear environment, and you have to be super clear, strategic and tactical and planned and know what moves you're going to make based on what you see in the market or based on orders that you already have set up to trigger at certain points.

[00:14:30] Like you can't go in there. Super excited or super angry or trying to get revenge because you felt like the market has taken your money in the past. Like you gotta be cool as a cucumber, baby, when you're going in there to trade. So don't go in there trading with emotion. And some things that you can do in this situation is setting up a pre trade checklist,

[00:14:51] just to ensure that your decisions are based on logic, not emotion. So every Sunday for me, I'll go in and I'll do something called marking up the charts that we'll get [00:15:00] into in other videos But what i'm doing is looking at some technical and fundamental things that I need to happen before I even enter a trade So there's a lot of trades where i'm like I have a thesis but from a fundamental side I feel like something's gonna happen based on earnings or economic reports or whatever But then if I mark up the charts and look at it technically using supply and demand or any other tactic i'll say Nah, it just doesn't make a score.

[00:15:26] Like it's, it, I need like 90 percent conviction in multiple things to line up on multiple timeframes from, from a day out to four hours to an hour. So on and so forth. We'll dig deeper into that. This is just for beginners right now. But I do have some stuff where we'll go deeper into that, but I need multiple things to line up before I even enter that trade.

[00:15:46] Like it's my little checklist. I've even mark it up and I'll put it on trading view to show what the score is that way. , if I'm flicking through my list and I'm like, Ooh, yeah, this one don't have a good enough score. I won't trade it. I might go back and run my checklist again.

[00:15:59] [00:16:00] That'd be more up to date because you know, the market's always changing, but if it doesn't give me that 90%, Confidence. I won't even trade it. I'll just say, Hey, you got it, boss. I even trade it. That's super important, but you also got to go in and analyze these trades, and when you go in, if you lose money, or if you make money, you got to go back in and do like a post trade recap and say, okay, why did I make money?

[00:16:25] You're probably not going to be, why did I make money? You need to go back and say, why did I lose money? And it's going to be because you went in And you were trying to revenge trade, or you over traded, or you did something stupid based on emotions and not based on your strategy. And one of my favorite behavioral finance books is going to be Trading in the Zone by Mark Douglas.

[00:16:44] , it's a great book. Mark Douglas has a gift for writing, and it really helped me get my mind right by checking out their book. So I recommend that one for sure. The next huge mistake is jumping in with no trading plan whatsoever.

[00:16:59] No [00:17:00] backtesting, no nothing, you just like, Hey, I'm just gonna see what's happening in the market. I'm gonna scalp it, I'm gonna go in and day trade, I'm gonna get me that Lambo, get me that mansion, and you all have no plan. And we already know the saying like it's such a common thing now It's just like cliche But the way that it goes is that you can probably say it with me if you fail to plan you plan to fail This is all about trading plans and jumping in and actually having that trading plan set up So, you know what you're actually doing and we're gonna actually give you some even more value by talking about the components of a trading plan So I talked about it on the last mistake where I talked about having a specific criteria for entering a table.

[00:17:42] I didn't talk about the exit criteria as well, because so many people. Once you go through stuff like this and you take your time and build a plan, you'll build in the entry, but you don't build in the exit, right? It's like going to war and you're just like, I don't know how long we're going to be here. I guess forever.

[00:17:59] That one was [00:18:00] close to home for me as a veteran. But anyway, we go in and we do stuff like that and don't know anything about when we're going to exit out. So this is just having a profit target or having that stop loss set at a point to where if you lose, you lose. And you can already know how much money you willing to lose if you wrong on a trade, just by having a entry and exit criteria in your trading plan.

[00:18:23] And money management, same thing as well. How much money do I want to risk on a single trade? And I've said this before, but remember, I'm just thinking about how volatile the trade may be. I'm going to always risk a smaller percentage of my portfolio or my allocated trading funds on that trade, because it's a little bit more risky.

[00:18:45] I'm definitely not going to play that game by putting all my money on black. I used to live in Vegas. I've done that too many times. So, we don't do that when we're trading. We're not gambling, we're investing. That's why I don't like the word play. It's like, oh, here's another play that's coming up. I'm like, no, no, no, no.

[00:18:58] Here's another [00:19:00] opportunity and investment. I don't want you guys to think we're playing roulette. Or doing silly stuff like that. Like I remember watching a video for one guru who's awesome. Like he's taught me stuff He's doing this thing and I really love him but somebody in this audience they were doing a live thing and this person asked like He asked this person.

[00:19:17] Are you in trades right now? And the person was like, I don't know I don't know if i'm in the trade or not. I I don't know What's that mean? And he had to break it down and say Do you have money that's showing up in your account with a company name next to it? Like they hadn't even got education enough to know if they was in a trade or what that terminology meant.

[00:19:40] It was confusing to them, right? This is insane to me. So I know that this person is in there just following whatever people are telling them what to do and don't know how to fish. So they just casting their line right next to yours and hoping that you get a bite because they ain't got no idea. That's not what we're doing here.

[00:19:56] We're trying to break that generational [00:20:00] poverty curse and get you to a position to where you can focus on things higher than money. Right? Because it's not going to buy you happiness, but it's going to solve a whole lot of those stupid problems that you have and give you a peace of mind so you can have a baseline to rise above all the nonsense and start actually creating great things of value into the world and helping other people because you ain't too busy trying to hold on to your life raft and saving yourself.

[00:20:24] That's why I do this stuff. This is super important to me. And that's why I said, I am not for people who want that. Get rich quick, Spongebob Squarepants, Mr. Beast, boom, boom, boom, flashy style. I'm for people who want to sit here and learn and really get these lessons. So, don't go in there risking all your money.

[00:20:40] I've seen it so many times and people are like, oh, trading ain't for me, trading is a scam. I'm like, no, you a scam, because you put too much money down and you risk more than you were willing to lose by not having a simple trading plan. And of course you always got to go in and regularly check out your trading results and adjust the plan depending on how you performing this is what a [00:21:00] trading plan is all about like we've all worked at jobs and did performance reports or even if you played sports you watched film and went through believe it or not Some of the best prop traders actually watch film, they record everything and they go and review it and their coaches and bosses see that and they go and question them about what they've done.

[00:21:18] So people are like, Oh, they're making millions. They, that's just super easy. No, it's not like they have systems built up to where they're managing performance and actually getting the most out of it by having a plan and having mentors and coaches and treating it like a real job and opportunity instead of just treating it like candy crush.

[00:21:34] \ Mistake number five is going to be overtrading. Everybody does this all the time when they first start trading, they feel like the more times at bat, the more opportunities I have to make money, which is wrong. Like the more times you get up there and you try to get into a trade, the more chances you have to lose money.

[00:21:51] Michael: People don't ever see the downside. I'm a super positive person. This is probably why I overtraded when I started, but you don't have to trade a lot to make money. Like you can come [00:22:00] in and be very selective by using. Some of the techniques I've taught you in the previous slides to go in there and get your money and get out and go enjoy your life.

[00:22:08] You ain't got to be in there over trading because you're just going to be giving your money right back to the market. If you're doing those things and you're over trading, don't do that. Limit the number of trades that you're actually doing per day or per week. Like I'm working on my trading plan now for a few months from now, based on some economic events that are happening and some earning reports.

[00:22:27] That's how far ahead that i'm building my plans because I know that if I don't have that plan set up I'll just jump in and think that I know everything and i'm like, oh my thesis is this So i'm going to just keep trading until I run out of money Or I just ruin my relationship with my family because i'm glued to the computer The more times you jump in and trade, the less money you make.

[00:22:46] Like it is a game of diminishing returns unless you're a professional. And if you're watching this video, you're probably not a pro, but if you are pro watching this video, let your boy bar about 10 million. I promise I'm good for it. I get it right back to you when I get my [00:23:00] paycheck. You feel me? But anyway, you got to think about.

[00:23:04] Those cool off periods as well. Like you got to take a break either when you win or when you lose. More importantly, if you hit a losing streak, you got to just say, fold it and say, you got a chief market aid for me and go back and review and reassess your strategy and look and be like, okay, why was I taking so many L's?

[00:23:22] Like I've done this so many times where when I got disciplined, I was taking L's and I just stopped. I might took a one L even though I said I'm going to take three that day, but the L just ain't feel right. And I was like, hold on. I had to go back to the drawing board and go back to practice and go back to training to figure out what happened and why I took that loss because I was confident that it was going to be a win.

[00:23:43] So I might've had to go back and adjust my strategy, right? Go lick my wounds. That was weird. We'll keep it in, but I may have to go back and lick my wounds and take a cool off period just to reassess everything [00:24:00] that's been going on. And this is why trading journals and things like that are so important.

[00:24:05] Edgewonk is a big one. You can set alerts and alarms to manage trading time. So this is a pro tip on trading view, you can go in and once you set your support and resistance or your entry and exit points, you can say, Oh, I want you to alert me on all my devices when we're approaching this actual entry point or when it gets triggered and you can get to your computer, open up your phone.

[00:24:27] When that thing triggers you based on your thesis and your plan, right? Those levels that you have set up to when you want to actually be watching the market and then you're just go. And watch the market from the end. You don't have to be glued to your computer or phones or whatever. Don't let this trading stuff take over your whole life and drive you crazy.

[00:24:45] There is light at the end of the tunnel. Don't make these top five mistakes and be like everybody else. But in this video, we talked about the top mistakes that trap many, many, many traders. And if you can address these, you're on your way to becoming a more [00:25:00] disciplined and profitable trader. If you want to take a deeper dive into how Any one of these topics, I've gave you this whole little lesson plan that I put together.

[00:25:09] In the link below there'll be some other resources you can grab too, but I want to help you guys break those generational wealth Curses, and if you found this video helpful, you already know what i'm gonna say like subscribe leave a comment Tell me what you learned if I didn't go deep enough ask some additional questions as well because we're trying to really Give you guys value here.

[00:25:30] I'm not trying to build a bunch of mr. B. SpongeBob SquarePants flashy flash flash Watchers i'm trying to build people that are trying to really build generational wealth and take it serious because we need to escape that pain From running from those bill collectors and not being able to answer your phone Or dealing with all this nonsense that comes with not having enough money To take care of yourself and your family.

[00:25:53] We need to rise above because our goal is to leave more for our families than just debt when [00:26:00] we die. Until next time, this has been your boy Michael T. Ragland. I am out. Peace.