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The Dark Side of Trading: How to Protect Yourself From Big Losses & Emotional Damage 💔📉 · Earn Your Leisure

• 0:01
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  Speaker 2: Well, we could talk about it now, I guess if
• 0:44
  Speaker 2: you want to jump into that part is like, you know,
• 0:47
  Speaker 2: the eighty million UH situation allegedly, So what they said
• 0:52
  Speaker 2: is that, you know, obviously when Trump he made the
• 0:55
  Speaker 2: truth social post on Friday, and that made the stop
• 1:00
  Speaker 2: market fall very, very sharply, but it also made the
• 1:04
  Speaker 2: crypto market have a major pullback. It was actually the
• 1:07
  Speaker 2: largest liquidation in crypto history for a single day. And
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  Speaker 2: allegedly UH there was a twenty million dollar edge that
• 1:18
  Speaker 2: was put in around an hour before he he made
• 1:24
  Speaker 2: that tweet, and that twenty million dollar that turned into
• 1:28
  Speaker 2: eighty million dollars very quickly. Now was even more suspicious
• 1:33
  Speaker 2: is that the account was opened just for that. It
• 1:37
  Speaker 2: wasn't an existing account, it was opened just for that.
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  Speaker 2: And then I think it was closed shortly after that
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  Speaker 2: closed it closed it out after shortly after that. So
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  Speaker 2: twenty turn eighty once.
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  Speaker 1: The that's a hell of a flop.
• 1:50
  Speaker 2: The market fell and the big cooin fell. But then also,
• 1:54
  Speaker 2: you know, unfortunately there was at least one situation where
• 1:59
  Speaker 2: somebody had committed Yeah. Now most people will say, like, well,
• 2:03
  Speaker 2: why would somebody commit suicide? Just wait, like you know
• 2:06
  Speaker 2: what I mean, like, just wait it out. But and
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  Speaker 2: it's something that we haven't really talked about a lot.
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  Speaker 2: But you know, when you trade on margin or you
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  Speaker 2: use a high level of leverage and you're trading, what
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  Speaker 2: happens is that you can get cashed out. And apparently,
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  Speaker 2: I guess this was a big time crypto trader, and
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  Speaker 2: apparently he was heavily leveraged on one of his trades,
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  Speaker 2: and they said he lost forty million dollars and I
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  Speaker 2: guess that led him to commit suicide. So this is
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  Speaker 2: the dark side, the shot the alex energy. You know,
• 2:40
  Speaker 2: he had mentioned that maybe we should talk about this
• 2:42
  Speaker 2: on Blackout, but I think it's appropriate even on Market
• 2:45
  Speaker 2: Mondays because it is an investment conversation and it is
• 2:48
  Speaker 2: it does highlight the dark side of trading for sure,
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  Speaker 2: where you can lose a lot of money if you
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  Speaker 2: don't know what you're doing, or if something goes you know,
• 3:01
  Speaker 2: opposite favor. So the mental health aspect of it is
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  Speaker 2: extremely important because this goes back to the nineteen twenties,
• 3:08
  Speaker 2: the Great Depression when people was jumping out of windows.
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  Speaker 2: This is not a new lass stock brokers that jumped
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  Speaker 2: out of windows in the nineteen twenties. So when we're
• 3:17
  Speaker 2: talking about investing and we're talking about trading, we also
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  Speaker 2: have to put mental guardrails up and then also just
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  Speaker 2: safety precautions in your investment strategy and your trading strategy,
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  Speaker 2: because yeah, you know, when you when you when things
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  Speaker 2: don't go your way, you know, you could potentially, you know,
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  Speaker 2: fall into a deep depression. You could go into a
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  Speaker 2: dark space, You can lose a lot of money, you
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  Speaker 2: can lash out at people, or worst case scenario like
• 3:47
  Speaker 2: what happened last week, you could end up hurting yourself. So, yeah,
• 3:51
  Speaker 2: the dark side of trading, you want to talk about that?
• 3:55
  Speaker 3: Yeah, for sure in futures you can have five to one.
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  Speaker 3: Ten to one verage is number one. That's the reason
• 4:01
  Speaker 3: why I say you should only take one to twelve
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  Speaker 3: trades per year to mitigate risk. But there's a couple
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  Speaker 3: of things you have to look at on crypto and
• 4:10
  Speaker 3: any leverage asset. A. If you're going overseas to have
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  Speaker 3: one hundred to one leverage, it can go against you. Secondly,
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  Speaker 3: the part that isn't talked about enough is when you're
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  Speaker 3: down or let's say the market is bleeding down how
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  Speaker 3: it was Friday, even if you have a stop loss
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  Speaker 3: in place, you can continue to bleed past your stop loss.
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  Speaker 3: I have four or five people message and you're like, hey,
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  Speaker 3: I'm trying to go along in this position.
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  Speaker 1: I can't.
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  Speaker 3: And then a few others say, well, I'm past my
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  Speaker 3: stop loss?
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  Speaker 1: What do I do?
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  Speaker 3: And I'm like, you have to call your broker because
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  Speaker 3: at that point there's nothing you can do. That's why
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  Speaker 3: we say trading has considerable risk, and the upside of
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  Speaker 3: it is that you can make a ton of money.
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  Speaker 3: I'm talking two to ten to fifteen million dollars in
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  Speaker 3: a good day.
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  Speaker 2: Well, we saw that. What is the tale of two stories,
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  Speaker 2: right yep. The one guy leverage and off the leverage
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  Speaker 2: made sixty million dollars in one day. Somebody else lost
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  Speaker 2: forty million dollars in day.
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  Speaker 3: And lost his life. And the other part is when
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  Speaker 3: you're trading, you're not just competing against the best traders
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  Speaker 3: in the world. You're competing against the best hedge funds.
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  Speaker 3: And now people who may have intellectual sources that you
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  Speaker 3: do not have, and governmental relationships that you may not have,
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  Speaker 3: and a broker doesn't care either way. We were talking
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  Speaker 3: before we started Martin Screlly, who got caught up in
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  Speaker 3: that pharmacy scandal a few years ago, who bought the
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  Speaker 3: Wu Tang rights. He was down twenty eight million or
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  Speaker 3: twenty two million dollars the week before, and JP it's
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  Speaker 3: on YouTube and JP Mortgan's calling his law like, hey,
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  Speaker 3: you got to figure something out to wire this money in.
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  Speaker 3: So be careful if you're trading on leverage. If a
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  Speaker 3: profit factor is not fifteen or high or so, for
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  Speaker 3: every dollar you put into the market, JA able to
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  Speaker 3: get fifteen out. Don't trade on leverage. And this is
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  Speaker 3: a lot of times, even when it comes to newer
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  Speaker 3: stocks or I even had a brother this weekend asked
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  Speaker 3: me like, well, why won't you talk about some of
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  Speaker 3: the quantum stocks, and like the platform is too big
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  Speaker 3: for me to tell you to invest in something that
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  Speaker 3: they have even said privately is not going to be
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  Speaker 3: the leader of Quanta. The upside is always the ment
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  Speaker 3: amount of money that you can make. But when you
• 6:15
  Speaker 3: are in the whole forty million, that kid didn't have
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  Speaker 3: somebody he can call and say, let me get a
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  Speaker 3: bridge long for twenty five million so I can work
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  Speaker 3: my way out of the hole. He can't just run
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  Speaker 3: to another country and escape the problem. And even when
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  Speaker 3: you're down that much, some brokers won't even let you
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  Speaker 3: open up another account to trade your way out of it.
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  Speaker 3: Trading has considerable risk. Please be careful, Please protect your
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  Speaker 3: mental health, and don't over leverage in trading.
• 6:40
  Speaker 1: God rest his soul. Yeah, it's unfortunate, it's tragic, but
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  Speaker 1: I'm glad we speaking about it because all the things
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  Speaker 1: that Shoddy mentioned are true. If you're new to this,
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  Speaker 1: it can become daunting. It can become depressing and it
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  Speaker 1: can feel overwhelming. It's margin is something that we don't
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  Speaker 1: talk about because I don't think any of us actually
• 7:03
  Speaker 1: use margin. It's not something that.
• 7:04
  Speaker 3: I want to do a future. But that's why I
• 7:06
  Speaker 3: say you got to limit the number of trains you
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  Speaker 3: take per year.
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  Speaker 1: So people even just need to know how it actually works. Right,
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  Speaker 1: And so margin has borrowed money. It's borrowed money from
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  Speaker 1: the brokerage and they are allowed to use that up
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  Speaker 1: to a certain extent or a certain point. And when
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  Speaker 1: you see when it's stocks are appreciating, futures appreciate absolute appreciation,
• 7:29
  Speaker 1: it's great. Right, you're making the money. You're making the money.
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  Speaker 1: The problem is when you see a day like Friday
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  Speaker 1: happens and it's a drastic pullback. Right, Those margin calls
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  Speaker 1: happen very quick.
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  Speaker 4: In the margin call is saying hey, we want our bread,
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  Speaker 4: we want coy, and they click in very very quickly,
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  Speaker 4: hit a certain threshold and we want our money back.
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  Speaker 4: The first thing they're going to ask is, hey, you
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  Speaker 4: need to put more money into your account or you
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  Speaker 4: need to liquidate all of your assets. Now, you might
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  Speaker 4: have put that margin call on a certain position, but
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  Speaker 4: it looks at your entire portfolio to get its money back, right,
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  Speaker 4: So if you're on a brokerage, they make a marginal
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  Speaker 4: and it's not inside of that goal. They're gonna look
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  Speaker 4: how to liquidate all of your portfolio.
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  Speaker 3: That you want to hold it for five years. And
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  Speaker 3: that's why you need to separate the trading account from
• 8:16
  Speaker 3: your long term investment account.
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  Speaker 1: That was that's where I was going. That's where I
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  Speaker 1: was going, and it is the reason why you have
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  Speaker 1: separate accounts type of trading. Right. So for me it
• 8:25
  Speaker 1: was three accounts. I have my long term holds right stops,
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  Speaker 1: have some indexes in another account. Then I have an
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  Speaker 1: options account, all three different brokerages. I don't mix the
• 8:34
  Speaker 1: money up. The other thing is time, all right. We
• 8:37
  Speaker 1: always talk about using time as an asset, especially trading,
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  Speaker 1: which is why we talk five to ten years or
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  Speaker 1: you know, for an eternity, if you're holding some of
• 8:46
  Speaker 1: these companies, or or you're buying yourself time. In terms
• 8:50
  Speaker 1: of leaps and options, we always want to use that
• 8:53
  Speaker 1: because the volatility is going to happen, it's actually needed, right,
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