I’m not gonna sugarcoat it … It’s a difficult time for those just getting into trading.
I feel for anyone trying to learn the art of trading during this insane volatility.
It’s not easy for me — a multimillionaire trader with more than a decade of experience — to time moves correctly.
I can’t even imagine how difficult it must be for beginners to approach building a strategy in an environment like this one.
But this is why I do what I do. It’s why I love to teach.
I’m here to guide you through anything the market throws at us, just as Tim Sykes did for me when I first joined his Trading Challenge back in 2010…
This week I took a stab at buying puts in some oil names…
… and let me tell you — it made my heart race.
It doesn’t matter how much money you’ve made in the market or how hot you’ve been trading. Anyone who tells you that they don’t feel something before entering a trade is a bald-faced liar.
But curbing those emotions is what will set you apart from the 90% of traders who fail.
That’s why I want to talk to you today about something that’s often overlooked but essential if you want to succeed in trading.
Specifically, read on to learn how to build up strong habits like patience, discipline, and why I still value Sykes’ #1 rule above all else…
Cutting Losses Immediately
As I predicted yesterday, oil stocks opened sharply lower this morning.
I traded Chevron Corporation (NYSE: CVX) puts yesterday, but I played it too safe. I sold a large part of my position before the close yesterday, missing out on some easy gains at the open this morning.
Did I beat myself up about it? No.
In the grand scheme of my trading strategy, reducing my risk on CVX made sense. The stock looked like it could see a bounce before heading lower and I didn’t want to hold puts through that period.
Bottom line: I’m dead serious about following Sykes’ #1 rule — cutting losses quickly.
Sure, I occasionally take some risk off that would have paid out (like the CVX puts yesterday).
But in the big picture, I’m guaranteeing that my account will never see a massive drawdown. I’ll never risk more than I’m willing to lose.
Plus, trading opportunities are like trains — there’s always another one coming…
(I made a much better put trade on CVX today, but more on that in a future letter…)
Zooming Out on Oil Stocks
Speaking of trading opportunities, let’s go back to the big picture and zoom out on what’s going on with oil stocks.
Even after a brutal first red day today, the energy sector is still wildly overextended. I think there’s more downside left in this trade.
That said, I need to stress again that you should never chase my alerts — or any alerts for that matter.
The reason my trading has been so consistent over the years is that I spent a long time developing a strategy that worked for me.
I didn’t chase alerts or follow other traders into setups that didn’t work with my strategy.
I don’t want Evolvers thinking, “Mark’s talking about this setup — I better jump in before it’s too late!”
Had I thought like this early on in my career, I probably would’ve blown my account up by trading patterns that weren’t right for me.
Practice being patient and disciplined. NEVER chase alerts.
Then, think about how you can apply the lessons I teach to a strategy that fits your personality, account size, and risk tolerance.
As I mentioned earlier, I feel for all the newbie traders trying to make sense of this crazy market. I’ve been trading professionally for years and it’s not easy for me either.
This is the time to go back to the basics.
Cut losses immediately. Don’t chase alerts. Be patient. Evolve.
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