Last year was one of the worst years in the past 30 years. However, did you know that the average bull market lasts over 3 ½ years, and the most recent bull lasted over 10 years! We will soon find a reliable bottom to trade from and you need to be prepared to take advantage of that. Novices usually get in too late and sell at bottoms. The saying, “Missed Money is better than LOST MONEY” could not be any truer than in this market. It’s vitally important to keep your powder dry unless you know absolutely how to take advantage of these extreme moves, we have been witnessing. Just when you think the market may be out of the woods, it can reverse on a dime as we have seen. Those of us that can read charts correctly know how to protect ourselves and also profit from markets like this. Don’t trade or invest unless you have a plan and know what to do under these market conditions. Don’t damage your account and learn how to profit daily at the right times in the right trades and investments. I have put together a short list of things to consider in your personal trading plan. You do have a trading plan, right? Those that do, benefit greatly. Let us help you construct a plan of action so you can benefit in any market environment.
Ever kick yourself after exiting a trade saying, “That was stupid!” Of course, you have. We all have. That is part of trading. IF FISHING were EASY, they would call it “CATCHING”. The goal should be to minimize mistakes during trading, particularly the easily preventable ones, and to learn from your mistakes! Although this list is far from exhaustive, some common mistakes that occur in trading that you should reflect on individually include:
- Not trading with the trend. You should know where support and resistance are for the major market averages, sectors, market leaders, and stocks of interest.
- Not having a clear technical reason, with a generous reward-risk ratio, supporting your trading decision before entering a position. Pristine courses and labs engrain in traders a disciplined “checklist” for entering and managing all trades.
- Not adhering to protective stops! IF this is a problem, don’t work on any other area until you have this completely under control.
- Averaging down on a losing position. Very risky and should never be done. Take your stops.
- Counting dollars or watching your P and L without looking at your bar-by-bar analysis.
- Not being aware of the crowd’s feelings of greed and fear.
- Not knowing when not to trade.
- Not keeping emotions out of trading, and learning how to control your own emotional impulses, psychological demons, and human nature.
- Not making the market “play your hand,” and chasing low-odd setups.
- Not taking personal responsibility for your own trades and actions.
- Not changing your strategies with the changing market environment.
- Using excessive position size to try to recoup prior trading losses.
- Trading highly volatile stocks or those with poor liquidity, volume, and high spreads.
- Not trading your style.
- Not having a Trading Plan.
- Not zeing adequately prepared (physically and emotionally).
- Not basing your trades on sound technical information, but instead on rumors or other unsubstantiated basis.
- Not being in touch with the market internals and market leaders.
- Making order execution or other errors.
- Just trading to trade and not with the patience and discipline required to follow YOUR PLAN!
We STRONLY suggest to ALL of our graduates to create a set of 5 binders to keep records of what they do. This is covered in our course work and a subject to cover in more detail at another time. Maintaining a daily trading journal and diary will allow you to study the things that you did well and poorly – and to learn from them! Those that do, ALWAYS BENEFIT! We are ready to help you accomplish this which in turn will also help you reach your Financial Goals!
