Too many traders are so terrified of making mistakes that they've stopped trading altogether. They hesitate on entries, skip A+ setups, and wait for "perfect" conditions that never arrive. The irony? Their fear of losing is the very thing guaranteeing they never win.
It's time to understand what a mistake actually is in trading — and why most of the "mistakes" you're beating yourself up over are exactly what you need.
Cardinal Sins vs. Data Points
Not all mistakes are equal. Michael draws a critical distinction between two types of errors:
Cardinal sins — the mistakes you cannot make:
- Not collecting data (not journaling, not taking trades)
- Risk management violations (averaging down into losers, ignoring stop losses, moving stops, compounding to the downside)
"Our biggest edge is our ability to lose small, which makes it easy for us to win big. Destroying that ability is a cardinal sin."
Data points — the mistakes that make you better:
- Getting an early entry
- Getting a bad fill
- Having risk management that's too tight or too large
- Getting more contracts than expected
- Closing five points before your target
"Pretty much everything else that you can do as a trader is a data point. You got an early entry? That's a data point. You get a bad fill? That's a data point. Your risk management was too tight? That's a data point."
The difference is everything. "Breaking my rules and skipping trades is a bad thing. Taking my trades and screwing up my execution is a good thing, because now I know what I need to fix."
The Sin of Not Creating Data
For 99.9% of traders reading this, the biggest problem isn't bad execution — it's no execution at all.
"You're joining because you're looking to learn a new strategy. You're trying to become profitable for the first time. You're looking to create some consistency in your trading. And you're currently finding reasons to make yourself sound smart, and you keep breaking cardinal rules."
What does that look like? "Skipping trades because you don't think this one feels right." But here's the reality: "You don't have the data to make those decisions correctly, and you need to create, track, and basically reflect on the information that you're getting for yourself by placing the trades."
The only way to develop judgment is to create the data that builds it.
Stop Trying to Be Perfect
"Too many of us are trying to be perfect. We're trying to get the perfect entry. We're trying to get the perfect take profit. And that is creating scenarios where we just hesitate, and we don't actually execute the system."
Here's what that perfectionism really does: "We start to go from making minor mistakes to making cardinal errors. We need to stop doing that. We need to give ourselves permission to take a little bump in the road so that we can get better."
Michael is direct about his expectations: "I will not get mad at you for making a mistake. I won't get mad at you for getting a bad entry price. I won't get mad at you for getting a worse fill than me. I won't get mad at you for closing five points before I do. All these things are good data points that we can use to improve your trading."
Fear Creates Self-Sabotage
"You should not be afraid of making those types of mistakes because that then paralyzes you. It tricks you into hesitating. It forces you into being stuck because you have no leeway to improve or get better. Everything becomes an all-or-nothing dramatic decision, and that is not the reality."
Think about how this plays out practically: "If you're not getting trades because your limit orders aren't filling, make it easy for yourself. If you click submit and the price is $864.50 and you get a fill at $866.75 — well, now you know that you're buying as the price is on the uptick, not the downtick. And now you've got a data point that you can fix and change and get better at."
That "mistake" just taught you something actionable. But if you never click submit, you learn nothing.
The Worst-Case Scenario Isn't That Bad
"Worst case scenario, you do something you don't want to do. You enter a trade that I didn't enter — you just close that trade. It doesn't have to be an outcome. It doesn't have to cost you $5,000. You can just get out of that position. So what? You paid some commissions or maybe a point or two. Not the end of the world."
Now you've got data. You can rewatch the live stream, see where the divergence happened, and make a correction. That's growth. That's trading.
The Only Way Forward
"The only way that we are going to learn and improve as traders is by making mistakes, testing solutions to them, and then seeing the results of those tests."
It's a cycle:
- Take your A+ setups
- Create data from the outcome
- Train your gut from the experience
- Identify what to fix
- Test improvements
- Repeat
"If you're not going to create data and you're just going to get in your head, then you're not behaving like a trader anyway. Your job as a trader is to create data, and the only way you can actually get there is by placing trades and allowing certain mistakes to happen and then correcting them."
Key Takeaways
- Distinguish cardinal sins from data points — risk management violations are unforgivable; execution imperfections are valuable
- Not taking trades is worse than bad entries — you need data to improve
- Perfectionism creates paralysis — which leads to skipping trades (a cardinal sin)
- Every execution mistake teaches you something — but only if you track it
- The worst case is small — close the trade, pay commissions, learn the lesson
- Your job is to create data — that's the actual work of trading
- You won't be perfect on day 1 or day 1,000 — just get a little better each session
Stop Waiting. Start Trading.
At DayTrader Funding, we fund traders who show up and execute. Perfection isn't the standard — progress is. Get funded, take your setups, and let the data teach you what no amount of screen-staring ever will.