Run Club Academy

Early Enrollment Pack · 03

The Ten Immortal Sins of Trading.

None of these are about picking the right stock. Every one of them is about risk, and about you. I have committed most of them. One of them cost me close to three hundred thousand dollars. Read them now, print them, and keep them where you can see them from the laptop.

Listen to all ten. About seven minutes, in LV's voice. Or press play under any sin below.Download the mp3
  1. 01Trading without a stop
  2. 02Sizing too big
  3. 03Revenge trading
  4. 04Overtrading
  5. 05Catching the falling knife
  6. 06No plan for the win
  7. 07Trading on a day you should not
  8. 08Trading without a reason
  9. 09Fighting the clock
  10. 10Skipping the practice

Sin 01

Trading without a stop

I decide where I get out before I get in. Every time. If I wait until it is going against me to decide, I am deciding with my stomach, not my head.LV

What it looks like

  • You are in a trade and you have not decided where you are wrong.
  • “I will just watch it.” Then the phone rings, or the baby wakes up.
  • You move your stop lower because you have a feeling it will come back.

The fix

Set the stop before anything else, the moment you are in. LV keeps hers tight, around 10 to 15 percent. If it hits, you are out, and nothing stops you getting back in if it turns. You cannot reverse a loss. You can always take another trade.

Sin 02

Sizing too big

When the size is right, a loss is a paper cut. When the size is too big, a normal wiggle in the price feels like the end of the world, and you cannot think.LV

What it looks like

  • One idea is a quarter, a half, or all of your account.
  • Your heart is pounding on a move that is completely normal for that stock.
  • You are checking the position at red lights.

The fix

No more than about 10 percent of the account in any one trade. On $10,000, that is $1,000. Work the number out before you are excited, write it down, and do not go over it because this one feels special.

Sin 03

Revenge trading

The market does not know you lost. It does not owe you anything back. Trying to win it back fast is how one bad trade becomes a bad week.LV

What it looks like

  • You take a loss, and within minutes you are in something new with no reason.
  • The next trade is bigger than the one you just lost on.
  • You are angry, and you are clicking.

The fix

After a loss, stand up. Walk away from the screen for at least fifteen minutes. If you hit your daily loss limit, the day is over. Write down what happened in your journal before you are allowed to place another trade.

Sin 04

Overtrading

Nothing obliges you to be in the market today. Some of my best days are the days I did not take a single trade.LV

What it looks like

  • You trade because you are bored, or because you sat down and feel you should.
  • Ten or twelve trades before lunch, and you could not explain half of them.
  • The fees and small losses quietly add up.

The fix

Set a limit on the number of trades a day, and only take the ones that match your plan. If nothing matches by the time your window closes (LV is usually done by 11:30 Eastern), close the laptop. No trade is a position too.

Sin 05

Catching the falling knife

I bought more on the way down because I told myself it was cheap now. I could have taken a paper cut. Instead a hole became a crater, and it cost me close to three hundred thousand dollars.LV

What it looks like

  • A trade is going against you and you buy more to “lower your average.”
  • You say “it will come back” out loud.
  • Your original stop has quietly disappeared.

The fix

Never add to a losing trade. Your stop was decided before you got in, and it does not move because the price got “cheaper.” Averaging down is digging a deeper hole to get out of a hole.

Sin 06

No plan for the win

The morning I did nothing, I had never decided what good looked like. I had nothing to measure against, so my brain just kept saying: more.LV

What it looks like

  • You are in a trade and have no idea where you will take profit.
  • It moves your way and you feel euphoric, not calm.
  • You watch a working trade turn all the way around.

The fix

Decide your plan for the win before you enter: where you take it, or where you take most of it and let a small piece run with its stop moved up. Write it on a sticky note on the screen. Excitement and euphoria both point one way: greed. The plan is what stands between them and your account.

Sin 07

Trading on a day you should not

Rule three is my favourite. Sick, distracted, busy, driving, not focused: close the laptop. You cannot lose money you did not put in the market.LV

What it looks like

  • You are sick, exhausted, or just had a fight.
  • You are at work, sneaking a look under the desk.
  • You are trading from the car, the school line, or the checkout queue.

The fix

Before you open your broker, ask one question: am I here, all of me? If not, today is a day off. Match your trading to your real life, not the life you wish you had today.

Sin 08

Trading without a reason

My first winning trade was a bad trade. I had no reason for taking it. I jumped in blindly, I was gambling, and I got lucky. A win you cannot explain teaches you the wrong lesson.LV

What it looks like

  • You bought because someone online said so, or because it was already moving.
  • You cannot say, in one sentence, why you are in.
  • You chase a move that is already up big because you are scared of missing it.

The fix

Before every trade, finish the sentence: “I am in because…” with something you can see on the chart: support, resistance, volume, a catalyst. If you cannot finish it, you do not take the trade. Missing a move costs you nothing.

Sin 09

Fighting the clock

Who is going to buy something from you that expires in ten minutes? Nobody. Time is not free: you are buying it, and it is draining while you watch.LV

What it looks like

  • You hold a contract that expires today, and you cannot watch the screen this afternoon.
  • You buy far-out strikes because they are cheap.
  • It is 3pm, the trade is not working, and you are hoping.

The fix

Match the expiration to your actual day. If you cannot watch it, do not hold something that dies today; buy more time or do not trade. Remember further out of the money is cheaper for a reason: it needs a much bigger move to pay.

Sin 10

Skipping the practice

I never paper traded, because I did not know it existed. I went straight in with five thousand dollars that mattered to me. Please do not do what I did.LV

What it looks like

  • Real money on your first week.
  • No trading journal, so every mistake is a surprise the second time.
  • You break your rules on paper and tell yourself it does not count.

The fix

Paper trade until the rules are boring. Size, stop, plan for the win, days off, all of it, like it is real. Keep a journal of every trade: why, stop, plan, result, feeling. When your rules feel boring and a loss does not ruin your day, you are ready for the next step.

Read the market. Manage the trade. Control yourself.

The last one decides it. Rules you set while you are calm are the only thing standing between a feeling and your account.

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