How Can You Learn from Your Trading Mistakes?

April 4, 2022
Making mistakes is part of the learning process, but how can we improve our ability to learn from trading mistakes?

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After you listen

  • Schwab has a library of educational webcasts you can use to improve your trading knowledge and help you learn from your mistakes. Visit Schwab.com/Live to learn more.
  • For more trading tips and strategies, check out the Trading Up-Close video series on Schwab's YouTube channel at Youtube.com/CharlesSchwab.
  • Follow Mark Riepe and Randy Frederick on Twitter—@MarkRiepe and @RandyAFrederick.
  • Schwab has a library of educational webcasts you can use to improve your trading knowledge and help you learn from your mistakes. Visit Schwab.com/Live to learn more.
  • For more trading tips and strategies, check out the Trading Up-Close video series on Schwab's YouTube channel at Youtube.com/CharlesSchwab.
  • Follow Mark Riepe and Randy Frederick on Twitter—@MarkRiepe and @RandyAFrederick.

In a busy world, the learning process can be difficult for most of us—especially when it comes to complex financial transactions. For one thing, there is a lack of objective feedback for many routine decisions, and of course decision-making biases complicate our supposedly rational thinking. For example, if we see good past returns on an investment, did we get those returns because we were skilled, or did we get lucky? Many people lean towards attributing good trades to skill and bad trades to luck—specifically, bad luck, or forces outside our control. If all of these forces are working against us when we make mistakes, how can we improve our ability to learn from those mistakes?

In this episode, Mark speaks with Randy Frederick, managing director of trading and derivatives for the Schwab Center for Financial Research. They discuss some of the common mistakes investors make when trading—and how to learn from those mistakes. Randy identifies some of the major obstacles: overconfidence, overtrading, buying at the highs and selling at the lows, and playing the all-in or all-out game.

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Financial Decoder is an original podcast from Charles Schwab. For more on the series, visit Schwab.com/FinancialDecoder.

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