Good Time to re-visit Trading Mistakes...........I have made them all...some more than once
Trading Mistakes Re-Visited............
Trading Mistake # 1.....Don't Fall in Love.....Got a great stock ..wonderful...Its a part of your portfolio that's doing well..Its not your wife or girlfriend Its not something or someone that is going higher because you own it...Its a decision you made that looks ( Right Now ) like you might be on the right side..Book it Dano...and move on..
Trading Mistake # 2...Never Average Down....People say all the time that its the best way to lower your cost...Of Course it is if you are holding for 20 years and I dont know anyone in here doing that..You are throwing good money after bad….Get out and re-evaluate
Trading mistake 3 Is Never Trade against the trend of the market..Lots of people think they are smarter than the market..Heres a clue..Youre not..Not only that..Regardless of how much money you have..Its not enough..Look at the market..
Trading Mistake 4...Dont ever trade Mistakes ....We all make em...they get compounded by trying to Trade out of them Profitably...Rarely happens and when it does Its luck...Get out and Take you lumps....
Trading Mistake 5…Never Trade without Volume...They must have volume ..so If you need to you can get out..Worst feeling in the world is to want to sell and cant because there are no bids.....
Trading Mistake 6….Failing to learn how to short…..
Trading mistake 7...Never Ever trade when You're Tired ..Need sleep.... Get it..The market will be there tomorrow and If you miss a setup..That's ok Another one will come along soon enough....Nothing worse than buying or selling when you're tired....You wouldn't work when you're exhausted why should you trade...Close the site and get some shuteye.....
Trading Mistake 8 .....Placing wrong stops......Placing a stop based on Percentage, although many people do it, can result in leaving a lot of money on the table. Stops should be based on Support and Resistance Lines. One way to look at it may be to chart the Bollinger Bands around a stock. The Bollinger Bands will tell you a good price to place your stop....“Ninety-five percent of all price activity falls within two standard deviations,” ..Stops are important and the right stops are very important..start them right and keep adjusting them...Look at them every day and adjust them according to your stock Movement..
Trading Mistake 9 Picking Tops and Bottoms....... The best traders in the world would never ever consider trying to pick a top or bottom..Know why ? Because they let the market tell them when a bottom or top is formed...Trading is an odds Game...and the odds are definitely in your favor when you allow the market to tell you when go Long or short...EGO...is the only reason to pick a top or bottom....Period....Its not an EGO Game...It an Odds game...and put the odds in your favor
Trading Mistake 10.....Looking at Biotech's and not seeing the pipeline...Only the earnings....Biotech's are not about Earnings when they are in the growth stage..they are about Pipelines and what they bring to the table in the future..Are they frustrating ..Absolutely...Can they be pushed around....Definitely ...are they big short candidates....Yup they are....and do they do a ton of money Raises..yes they do...Can they go from pennies to hundreds of dollars..O yea...they have for me..I have made and lost a ton in them..They are definitely not for the weak of Heart
Trading Mistake # 11…."Losing your cool..."....Most successful traders dont let their emotions get the best of them...Contrary to what you believe that stock you just sold, didnt go higher because you sold it...Believe me you are not that powerful...Most successful traders learn from their mistakes and limit them...You know why you sold before it took off..Most likely out of Fear because you had too big of a position..Every event is either a Gift or a Lesson....Learn to keep your emotions in check or find a new Profession....This may seem like a trading mistake thats not that important..but trust me ..It is.....One way to see if you are right or if you had just bad timing..Trade 100 shares or sell down to a comfort level...No one is telling you to sell it all...
Trading Mistake # 12.....Not Establishing a Risk Reward Ratio....... Every Trader is different and has a different comfort level..I believe everyone has to establish for themselves what they expect from a trade before they enter the trade...Yes before they enter the trade.....If I see a trade that I think can go from 40 to 41 although that may be a great day trade...It doesn't work for me as a swing....I need to have the potential to make 3 times my money on a swing..so in the case where I am buying a $40.00 stock I have to see that the probability of getting to $43.00 is there or I don't enter it as a swing...Be selective there are plenty of stocks to choose...And there will be setups....You don't have to rush into a trade .....One thing I have learned over the years..Sellers come out at every level..Buyers can and do Dry up....
Trading Mistake # 13……….No Recordkeeping When the Bell rings the work just begins…What needs to be done is you must review what you did well today and what you didn’t…Make notes…. create a diary…and most important Chart your buys and sells….your P&L….The last thing someone wants to do after a losing day is to recreate it….But to be successful you have to…To learn you have too…
Trading Mistake # 14…..Trading the news instead of the stock. Just because you like a company or its product, doesn’t mean you should like its stock. Lots of people see how great a product did and buy their stock on the open. Be careful not to confuse amateur hour with real buying….
Trading Mistake # 15 The tax tail wag the dog. “In 2008, Etherington worked with a family that had held a large Bank of America BAC -0.41% holding for years. Not only did they have an emotional attachment to the stock, they didn’t want to pay the taxes on the cash they would earn from a sale. But when bank stocks got crushed in the financial crisis the family was out much more than the 15% capital gains tax.”…..Pay the tax and be happy to do so……
Trading Mistake # 16 Getting too big for your britches and being Greedy… So You have been successful trading 1000 shares per Trade, your making money and everything is great. All of a sudden you get this bright idea that if your making X amount trading 1000 shares why not trade 2000 and make double. Makes sense Right…Wrong !!!!!! When you decide to increase your trades do it slowly…calmly…and most of all not all at once…There is absolutely no reason you can’t go from 1000 shares to 1100 for a week or so and if that works go to 1200..etc Until you find your new comfort zone. Capital preservation is the key….You cant play if you have no cash..
Trading Mistake # 15 ….Using Margin improperly….Want to destroy your account quickly…Borrow the money to trade from your broker and be wrong….Doesn’t take long to ruin an account with borrowed money…If you must Borrow….Borrow intraday and use it wisely….Having to sell because you have a margin call and seeing your stock skyrocket right after you sell isn’t pretty….
Misusing margin
If there is anything that can destroy a trader's account, it's margin. That's when you borrow from a broker to buy securities. If used properly, margin is a valuable tool that can boost profits and give traders breathing room. In the past, many people misused margin, borrowing more from the brokerage than they could afford. It wiped out some traders' accounts and helped to give day trading a bad name.
Trading Mistake # 17...Chasing....One of the most common Mistakes a Day Trader can make is chasing..More than Likely You're going to lose money. Now this mistake is only for Day traders..When we see a stock taking off and don't pull the trigger we wait and wait and wait..until we finally buy near the top and get stuck while the experienced traders are getting out. So what do we do....We compound the mistake by turning a day trade, into a swing trade into a position trade..until we have lost so much money we sell out...at which time the stock turns and goes higher...Number 1 rule..is that's there's always another one...Take a deep breath and realize that you are not going to be in at a great price on every trade...Like they say...they come along like buses every few minutes....Capital Preservation is the name of the game....No money ...No trading Trading Mistake # 18...........Not booking Profits....Stocks move all the time..Higher , Lower..Blah, Blah Blah....Can you remember how many times you were up on a trade only to have it turn into A loss...Not Cool....The bottom line is increasing your capital and you can only do that by Booking Profits..Book em Dano..Book em...You can always get back in...
No comments:
Post a Comment