if you are in the beginning stages of
your trading career there are mistakes
that you will make inherently because of
the way that the human brain works so in
this video i'm gonna give you the top
three reasons you're still struggling
with your day trading
[Music]
welcome back to the channel everybody my
name's artie and this is the moving
average a show where we discuss
everything day trading to keep you
profitable on a consistent basis so a
lot of you guys see the potential of day
trading and once you first start you
start having a little bit of beginner's
luck right few trades go your way you
made 10 bucks 20 bucks 100 bucks and
you're like i could replace my full-time
income with this then as you get deeper
into it you have loss after loss after
loss after loss and you think to
yourself what was i doing wrong i know
exactly how you feel because i've made
these exact same mistakes and i've lost
thousands upon thousands of dollars
doing it so what i'd like to do is share
these three things with you so that you
can avoid them and or learn how to stop
them in the process okay the number one
example is called loss aversion this is
a weird thing that your brain does when
you are doing anything in your life not
just day trading think about a caveman a
caveman has very limited things so he is
not willing to lose any of his
belongings any of his stored food
because that hurts way more versus
getting a fresh kill on and i don't know
a deer elk mammoth saber-toothed tiger
those successes are immeasurably less
valuable to him because it's the process
of moving forward so psychologically we
want to hold on to what we have and it
hurts to lose it and when we get gain we
expect it now this silly graph right
here explains it really really well
as you start losing more and more and
more you feel more and more pain now
let's say that this point right here is
negative 500 on a trade you feel
massively miserable and it hurts your
guts whereas if you were plus 500 on
your trade you would only feel half the
amount of joy that you should expect but
you don't because your brain is
programmed that way and the more you
gain the less pleasure you will get out
of it this is why so frequently people
move their stop losses even if they're
negative they don't want the trade to
close negative because that will be a
realized loss they are willing to hold
it in hopes that it will go back to
being positive and even if it did
reverse from negative 500
even to positive 10 you will not close
that trade because you want that huge
success even though you should know
psychologically it won't give you the
same satisfaction that's why sticking to
a trading plan is the best way you want
to be cold-hearted and emotionless when
it comes to your traits you want to
maximum lose one percent and have your
take profit set at two percent this way
you are consistent and you avoid the
loss aversion mentality that is
literally programmed in your brain from
caveman times now the second thing that
i want to discuss is revenge trading
this is one of the most detrimental
things to anyone beginning in the day
trading space this is what happens you
have a trading plan the trade goes
against you on the first round you lose
a hundred dollars for you that is a
massive amount of money and it hurts and
you want to win it back that is your
first mistake once you lose that trade
and you lose that money it is no longer
yours you cannot consider it yours so
you cannot get it back you should cut it
off right there
look at your total trading balance and
begin to trade with that with a fresh
mind and a fresh start the best way to
do that is to wait 24 hours and trade
the next day
if you lose a hundred dollars and you
continue to trade thinking you want to
win that hundred dollars back because it
is yours and you deserve it you are
wrong and you will get burned what
happens is you take these bigger trades
higher risk to get that money back
faster then as you open up any trade you
all know this due to the spreads and the
commission your trade will immediately
be negative even if it dips a little bit
and goes further negative you will close
that trade in fear of losing more so you
will open up five high-risk trades and
close them all at losses because it
hurts to lose you will literally throw
out everything you've learned about
technical analysis and being a
cold-hearted machine when it comes to
trading and you will run 100 off of
emotion you will make decisions that you
will regret but you're not thinking
about at that time because you're
emotional if you lose a trade and it
hurts your guts and your cheeks start to
get red and your blood pressure rises
you cannot handle day trading the way
you're doing it what you need to do is
go back to testing and demo to gain the
confidence and if that happens to you
while you're actually trading what you
need to do is close your computer and
just go take a walk and start trading
the next day realize that loss was a
loss it is no longer your money it is
floating in the market for someone else
to win and then you just start again the
next day with a fresh mindset and the
last and most interesting and most
relevant to most beginners is going to
be the dunning-kruger effect you've
probably never heard this before because
i just recently learned about this like
seven months ago after a year of day
trading this is a prime example of how
the beginner's luck mentality works in
this graph you have confidence on this
axis
knowledge and skills on this axis the
beginner's luck phase is right here most
people as they begin day trading start
to get a little bit of knowledge on
technical analysis and how to trade
during that phase your confidence shoots
through the roof because you're like i
can make money i can work at home i can
spend more time vacationing and being
with my family
i'm gonna be a billionaire at that peak
pinnacle point right here is the top of
mount stupid unfortunately you do not
have the knowledge and skills to be a
good day trader but you have the
confidence of an eight foot tall man
with 10 abs so you might get a little
bit of success here due to your massive
amount of confidence but once you start
losing oh brother that's where it really
happens you get down to the valley of
despair and you start questioning every
single one of your strategies every
single one of your trades you start
thinking that forex trading is a scam
and that this is the biggest waste of
money and time and by this point you've
probably lost five to ten thousand
dollars of your own money what i want to
instill in you is persistence i've gone
through this mount stupid phase where i
deposited ten thousand dollars and the
valley of despair where i lost that ten
thousand dollars i thought i knew
everything but i was not even close if
you do however have that persistence the
i am never going to quit mentality
over years i'm talking thousands of
hours of research knowledge and testing
and learning
over that time you will start to grow
wisdom the slope of enlightenment will
get you to the point where you not only
have the knowledge and the skill but
also the confidence to execute on that
knowledge and skill so do not let that
beginner's luck mentality confuse you
you do not know as much as you think you
do but the more time and effort and
energy you put into learning testing and
trading and practicing and demoing and
journaling you will get to that guru
level so if you guys want a little bit
of a deeper explanation into all three
of these things i've linked all three of
those articles down below they're very
informative and very helpful and will
help you realize what's going on inside
your head while you're making these day
trading mistakes and if you are one of
those people that continue to make the
mistakes and you don't realize what they
are i've made a video of the top 10 most
common day trading mistakes right here
so go watch that and make sure you don't
do those things because it's
catastrophic and if you guys enjoyed
this video and you like the way that i
teach make sure you're showing your
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thanks so much for watching and we'll
see you in the next video