How many stocks that went to zero do you include in your backtesting model? None? That's amazing, every stock you plan to trade from now on is a guaranteed winner. That's incredibly intuitive of you, Buffett Jr... You shouldn't need to factor those ones in at all.

Ok, again, look. 🙈 #

I'm not trying to upset you. Maybe that was harsh. Can we start over?

There are a number of reasons why people might self-sabotage when it comes to trading risk. One reason might be that they are afraid of losing money, so they take on less risk in order to avoid potential losses. Another reason might be that they are overly confident in their ability to make money, so they take on more risk in order to maximize their capital. Finally, some people might simply be irrational and make poor decisions when it comes to risk management.

What's going on? 🙉 #

Innocence is always met by jealously — every action you take has a consequence.

It's a zero sum game, so let's talk about it #

I'll try this again. Let's show your cards, what have you got?

In a zero sum game, one person's gain is equivalent to another person's loss. For example, if I trade you my apple for your orange, then I have gained an orange and you have lost an apple. Trading is a zero sum game because there are always two people involved in a trade, and for every trade to occur, there must be a winner and a loser.

How is trading, a zero sum game, affecting you?

Most retail trader's capital can't beat large banks and hedge funds because the latter have much more capital to work with, which gives them an advantage in the markets. They also have access to better information and resources, which allow them to make more informed decisions.

Simple put: trader's capital can't beat out large banks and hedge funds over even the smaller time horizons.

You're a victim #

Oops, sorry snake oilmen, not calling you out (yet).

Talking about this monkey brain. Even if you think you have a control of this, there is always an unconscious survivor ship. You can't escape it. But there are several factors playing to your disadvantage that are not often talked about. More on that here. But for now, let's talk about what the real limits are.

But you're still ignoring your failures 🙊 #

You are stuck believing events are not as risky as they are because the rewards feel worth the payoff of losing more than you value being right.

Cost #

Ok start with something that should be obvious. As much "free data" or how many free trades that been dangle in front of you; it doesn't cost these people "nothing" to provide you these services directly to your remote mobile or overpowered device. No matter how much you want to believe "it couldn't be the difficult" — it's not really so easy for companies to give you the sort of life you want to live.

You might imagine the person at brokerage must be living the life at the beach, you have to understand that they are not, because it's expensive for these companies to keep the lights on. Which is part of the reason why there are so many hidden prices that you glaze over to the point you've given up your email address and you realize at 9:00PM when you finally check your phone that there was a charge to your account and now you're subscribed to just another data-thing.

Not only is there an aspect of slippage or hidden commission built into these ever evolving terms of services, but the information and expectations of where you trades are going is a whole other story.

After-tax returns #

Are you being honest with yourself here? What about to the IRS?

It's quite simple when you do the math. After-tax returns limit investment returns by imposing a tax on the investment income earned by the investor. The tax reduces the amount of money available to reinvest in the project, which reduces the potential return on investment.

Volatility vs over-under performance #

Volatility in the markets can lead to investors feeling that their gains are not as great as they could be, leading to disappointment and discouragement. When the markets are down, it can also skew how investors view their gains, leading them to believe that they have lost money when in reality they may have simply made less than they would have during a more stable period.

The same is true for when markets are up: performance is a benchmark of your own experiences.