The Trading Coach Podcast 1145 - It's REALLY Easy & Hard To Lose Everything in Trading
Apr 7, 2025
Losing money in trading can feel both shockingly easy and frustratingly difficult. The discussion focuses on the crucial importance of risk management, specifically maximum allowable drawdown. Listeners hear personal stories of setbacks and the strategies that can prevent them. Additionally, the emotional impact of trading losses is explored through a candid account of one speaker's crisis, leading to reflections that reshape their approach to money management.
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Set a Max Allowable Drawdown
- Set a maximum allowable drawdown as your kill switch for losses.
- Stop trading immediately when this limit is reached to avoid blowing your account.
Losing Everything is Easy and Hard
- Losing everything in trading is both oddly easy and hard simultaneously.
- Without risk management, gambling with money leads quickly to full loss.
Manage Portfolio-Wide Risk
- Always consider total portfolio risk, not just risk per individual trade.
- Avoid opening many trades that combine into a large risky exposure simultaneously.