As your mentor, my primary goal is to help you overcome the trading problems that affect newbies the most.
And in this ‘danger zone’ market, it’s more important than ever to steer clear of avoidable trading pitfalls.
No trader is perfect. We all have flaws. But assessing your problems can be overwhelming…
“What exactly am I doing wrong?” “What can I do to improve?”
These are questions I used to ask myself constantly when I was first starting in the markets.
But had I known about the problems I’m about to detail on my first day as a trader, I might’ve steered clear of some regrettable plays.
Which is exactly why, today, I’ll break down the three most common problems I see students facing.
Then, I’ll lay out a few simple steps you can take to potentially avoid these issues altogether.
Keep reading and I’ll show you…
Missing Five-Star Setups
If you find yourself missing solid setups on stocks in your watchlist, you need to be honest about why it’s happening.
Are you ignoring technical indicators? Do you have the right names in your watchlist? What’s the common denominator for these misses?
If you’re not technically skilled enough to identify five-star setups, then this is less of a problem. That ability will come with time and experience in the markets.
But if you’re identifying the setups and simply not trading them … you’re leaving money on the table. And it’ll be very hard to succeed as a trader if you continue to do this.
After working with so many trading students, I’ve noticed that a common reason for this is the fear of losing.
If you’re afraid of losing money, I get it. Nobody likes to lose money, and that fear can constantly live in the subconscious of traders.
But if you’re passing on bread-and-butter patterns because you’re afraid of losing, you need to take a step back and examine your mindset going into the trade.
Even if you have a solid win rate, the fear of losing can occasionally cause you to second-guess a good setup. And that’ll make your unavoidable losses hurt even more!
Bottom line: There’s an easy way to avoid the fear of losing — by trusting your gut.
Trusting your gut is easier said than done. But as you gain more experience trading, you’ll build more confidence in your convictions.
Getting a few solid wins under your belt can do wonders for a young trader’s confidence.
Trades Going from Green to Red
If you find a trade going from green to red, you must cut your losses immediately — it’s Tim Sykes’ #1 rule for a reason!
By doing so, you’ll limit your losses to a small amount. (A small loss is preferable to an account-ruining disaster!)
Remember that 90% of traders FAIL…
But most of these quitters don’t give up because their account isn’t growing fast enough … they give up because they lose all of the money in their account.
So, how can you avoid losing a lot of money? By cutting losses quickly.
This is why my profit chart has never had a massive drawdown. I’m extremely disciplined about cutting losing trades before I lose more than I’m willing to.
Beyond that, you’ve gotta be patient. Just because you aren’t losing money doesn’t mean you’re earning enough to say you’ve ‘made it’ as a trader.
Like mine, your trading journey will probably be long and challenging. That’s okay … it’s actually what you should hope for!
But if you get tunnel vision and fail to cut your losses quickly, your career will be short and tragic instead.
Getting Lucky (as Opposed to Skillfully Winning)
Have you ever heard the saying “it’s better to be lucky than good?”
Well, in the stock market, this couldn’t be further from the truth. Let me explain…
As strange as it may sound, a lot of newbie traders are hindered by early wins. They get lucky toward the beginning of their trading journey, which colors their trading outlook in a negative way.
The truth is, anyone can have a lucky streak in the stock market. Even the most clueless of newbies can stumble into a concurrent series of big wins … accidentally.
With so many trades happening all the time, odds dictate that these scenarios happen more often than you might think.
But only a small subsect of traders can rise above luck to develop a unique strategy that’s consistent and repeatable.
All this to say, if you string a few lucky wins together without a repeatable strategy … don’t get ahead of yourself, thinking you’ve got it all figured out.
It’s far more likely that you simply got lucky, which is why it’s crucial to stay humble as a trader.
If you don’t, I promise that the market will eventually humble you in a much more financially devastating way.
When reflecting on my career, I think developing a repeatable strategy (that I could use over and over again) was the most important progress I ever made.
I didn’t just win on a handful of trades and suddenly decide I was the next Warren Buffett…
I applied my game plan to thousands of different setups and won on the vast majority of them.
And now, I want you to focus on doing the same.
Don’t let avoidable problems bog you down!
Have the courage to take the difficult steps that most newbies ignore.
It’s the only way you’ll find long-term success in the stock market.