Have you ever wondered how a millionaire trader bounces back from brutal losses?
If your answer’s yes, it’s time to pay close attention…
Over the past few trading days, I’ve made some regrettable moves that I wish I could take back. It was only yesterday that we were discussing my disappointing trade on Occidental Petroleum Corp. (NYSE: OXY)…
Since then, I made two more losing trades on the ProShares Bitcoin ETF Trust (NASDAQ: BITO) and Nvidia Corporation (NASDAQ: NVDA).
At one point or another, every trader will face a period like the one I’m in now.
Bottom line: I need to make some changes in my trading mindset.
Let’s break down the three steps I’m taking to improve on my subpar week of trading…
Step #1: Perfect My Timing
I’ve said it before, and I’ll say it again — timing is EVERYTHING!
You can be 100% right on a trade thesis, but if you enter the position too early (or too late) … you might as well be 100% WRONG!
This was the case with my BITO trade over last weekend.
Last Friday, just 20 minutes before the close, I bought 50 BITO 3/25/2022 $27 calls for 65 cents.
Technically, the chart looked incredibly strong throughout the day. I thought it would continue ripping into Monday.
Fundamentally, the Russia-Ukraine conflict has brought the potential utility of a decentralized digital currency into focus.
REMEMBER: When technicals and fundamentals line up together, these indicators can lead to some amazing setups.
I was exactly right on the basics of my trade thesis — but I was dead wrong with my timing.
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On Monday, BITO saw a red day as it backtested the 50-day moving average before heading higher.
I should’ve waited an ‘inside day’ (like Tuesday) to buy calls. My fatal error was buying bullish options on a strong green day.
I was too early to this trade, and I paid the price for it. Focus on perfecting your timing to avoid mistakes like mine in the future.
Step #2: Stick to My Winning Strategy
My primary strategy is buying puts on blow-off tops and overcrowded momentum stocks.
Sure, I’ve had success going long before … but bullish setups aren’t my bread and butter.
I need to remind myself of this and stop trying to trade patterns that are outside of my area of expertise (like the BITO trade).
Remember: There’s nothing wrong with sticking to one setup or strategy and trading it over and over again.
Some of the most successful traders in history have done exactly that. If it ain’t broke, don’t fix it!
I learned this WAY back in 2010 when I first joined Tim Sykes’ Trading Challenge. But sometimes you need to remind yourself of the valuable lessons you’ve learned in the past.
So allow me to remind you. I think it’s best to zero in on one area of trading and become a master at it. Don’t assume that you need to be good at everything.
Focus on developing a strategy that you can be consistent with. Then stick with it continuously until it stops working.
I tried to get creative with my long BITO trade, but I’m not as confident trading calls.
Moving forward, I plan on mostly sticking to my puts strategy unless I’m 100% confident in my timing on a calls trade.
Step #3: Trade Less
At some point, every trader’s guilty of overtrading. It’s unavoidable.
If you find yourself in this category, don’t panic.
Focus on that blunder — then work tirelessly to improve upon it
In that spirit, my third step to improving my trading is to simply trade less.
This was one of my 2022 New Year’s trading resolutions. But this week, I didn’t stick to my personal promise.
I had multiple trades on at once this week, which isn’t my normal style.
By the time I bought NVDA 3/25/2022 $260 puts yesterday, I’d already taken two losses earlier that morning.
All these moves happening at once definitely affected my trading mindset…
Ideally, I prefer to focus on one incredible setup at a time.
By momentarily forgetting this rule, I think I overcrowded my brain — and traded worse than usual for it.
My advice? Avoid overtrading AT ALL COSTS.
When I reflect on a week of subpar trades, the very first thing I do is write a list of ways I could improve my moves in the markets.
I don’t beat myself up or get depressed about it — I get proactive by fixing my mistakes.
I urge every Evolver to approach it this way. You’ll learn more from your disappointing losses than you ever will from your exciting wins.
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