Most Traders Make This Mistake Every Single Day
In a Nutshell
The core mistake isn't buying early or getting direction wrong—it's changing intentions mid-trade through revenge trading (long to short to long) while using oversized positions that create emotional stress. Proper risk management requires defining maximum loss before entry, maintaining consistent position sizing at 20% or less when trading without confirmation, and sticking to the original plan rather than reacting to every price movement. The biggest account killer is giving back profits through one bad trade, which is prevented by using favorable risk-to-reward ratios (2.5-3% potential profit vs 0.75-1% risk) and allowing winners to run while keeping losers strictly controlled.
These notes were generated by AI and may contain inaccuracies.
The speaker describes a mistake made during a live trading session on Friday with Micron (MU). At market open, MU gapped down 3.5-4% and was technically oversold. The speaker bought the dip to go long on the 5-minute timeframe, but direction had not changed and the stock continued selling off.
The trade became stressful as MU kept declining. After 10-40 minutes of continued losses, the speaker sold at approximately 925 for a loss after buying at 950. This was described as cutting losses too late. The speaker then reversed to short the stock, but it found support and began recovering. After closing the short for another loss, the speaker went long again, only to see the stock break below 950 once more. This cycle of long-short-long continued with repeated losses as the speaker reacted emotionally to each direction change.
The first mistake identified is buying too much too early when trading before confirmation. The speaker clarifies that buying the dip early is not inherently wrong if done with proper risk management and a clear reason, such as viewing it as a long-term opportunity or swing trade. The issue becomes overwhelming when position size is too large, making the pressure of the trade going against you emotionally difficult to handle.
The recommendation is that when buying before confirmation, position size should not exceed 20% of what you intend to buy. The first response when direction goes against you should be to cut losses, not add more. Adding more when losing is often driven by being emotionally invested, which exacerbates losses and adds stress while reducing the ability to tolerate recovery time.
The second mistake is changing the trading plan and overtrading. The speaker emphasizes that buying early was not the main problem - the intention was to buy because it seemed like a good deal that would eventually recover. The real issue was revenge trading: going from long to short when the trade went against them, then back to long, then short again. This created a cycle of emotional decisions that ignored the obvious market direction.
The speaker notes that if nothing had been done after the initial entry, the position would have recovered to the original entry price of 950. The constant changing of positions and intentions led to giving back more than necessary. The advice is to stick with the initial intention rather than changing plans due to emotional reactions.
The speaker addresses the misconception that the market is "against you" or that market makers are targeting individual traders. For accounts of $100,000 or less, it's unrealistic to believe institutions would move trillion-dollar market caps to cause small losses. The focus should be on taking advantage of opportunities where potential gains exceed potential losses, and putting oneself in a position to tolerate recovery time.
Key principle: If the intention is to buy the dip, maintain that intention rather than switching to shorting at oversold levels. Going from long to short to long creates a complete mess and deeper losses. Doing nothing would have been better than the sequence of emotional trades.
The single biggest mistake traders make is giving back more than they make. Anyone can make money in the market, but it only takes one bad trade to give it all back without proper risk management. The speaker has uploaded trading videos for over 10 years, focusing not just on making money but on keeping it.
Stories of traders growing accounts from $1,000 to $100,000 through options or meme stocks typically end poorly because risk management was never learned. Market sentiment changes and rotations happen, and inexperienced traders with larger accounts become bigger targets for losses.
Successful traders aim for setups with 2.5-3% profit potential while managing risk at 0.75-1%. This calculated approach creates an edge through consistency and discipline over long periods, focusing on quality setups and trading less but profiting more.
Even if a trade recovers, the key is having a maximum dollar loss or maximum percent loss defined before entry. Without this, traders remain one bad trade away from giving back all gains. The principle should be allowing winners to run while keeping losers strict, with every trade having a hard stop - either as a percentage or dollar amount.
The speaker references risk-to-reward ratio calculators available on the LPP (Learn Plan Profit) platform. These tools allow traders to plan trades by entering position size, maximum loss potential, and maximum profit potential before execution. If the potential loss seems too large, the trade can be avoided or the plan adjusted.
Traders should determine their win rate and ensure risk-to-reward ratios align with their trading approach. Many traders risk 2.5-3.75% per trade while only making 1.5-2%, which prevents profitability. The goal is ensuring potential profits exceed potential losses through favorable risk-to-reward ratios.
The mistake was not buying the dip too early, but changing intentions and overtrading. Going from buying the dip to shorting, then back to long, represents revenge trading that ignores market direction. The speaker acknowledges that waiting for full confirmation of reversal would have been safer, but accepts buying early with smaller position sizes.
The solution involves reviewing previous trades to identify patterns of emotional decision-making. Traders should consider whether sizing down on positions and giving trades time to work would have been more effective than constantly changing direction.
The speaker emphasizes thinking about worst-case scenarios rather than best-case outcomes. Using Tesla as an example, buying at $311-313 with the intention of selling at $450 while having a stop loss much lower creates poor risk-to-reward ratios. A position of 100 shares could result in $9,100 in losses if the stock dropped to $220, which many traders might not be able to stomach during extended recovery periods.
Traders should visualize both the good and bad outcomes of every trade before execution. The market operates on no schedule and doesn't need to recover quickly, making proper position sizing and risk management essential.
The speaker offers access to LPP tools including the risk-to-reward ratio calculator, daily live trading sessions, and the lesson library. These resources are designed to help traders become more intentional with position sizing and risk management. The platform offers one-time payment for lifetime access to all materials.
The key takeaway is that mistakes happen, but the problem occurs when traders don't manage or mitigate those mistakes. Trading more does not yield more money - doing less can often be better when combined with proper risk management and intentional decision-making.
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