Happy Friday, Evolvers!
At this point, it almost feels like the market is doing whatever the Federal Reserve doesn’t want to happen.
Yesterday, Fed Chair Jerome Powell spoke at a monetary conference and said that he vows to continue raising interest rates (to fight inflation) “until the job is done.”
This sounds like bad news for the stock market, but the way it’s reacting today suggests anything but…
The week is ending bullishly, with the S&P 500 ETF Trust (NYSEARCA: SPY) up three days in a row (+1.2% today at the time of writing).
CAUTION: It’s a surprising and impressive multi-sector bounce, but keep in mind that this is only a few days of price action. These gains could easily get taken out next week.
We’re seeing a combination of near-term oversold conditions and contrary price action leading to a small (and in my opinion, fragile) bounce.
This brings me to an important point … Don’t let momentary moves change your overall game plan.
In a market this volatile, you’ve gotta have conviction in your predictions. If you don’t, then wait until you do before you execute any trades.
Overall, I’m still bearish on the major indexes and a few days of green isn’t gonna change that.
Now, let’s get to answering your questions for the Friday Q&A!
“It seems like I’m always selling my contracts too early (or too late). If I hold, my contracts tank. If I sell, the contracts surge right after I exit the position. How can I fix this?”
First, know that you’re not alone. I’m familiar with this feeling and understand your struggle with it.
It sounds like you’re not comfortable holding your positions through volatility…
And if you’re feeling uncomfortable in your trades, it’s probably time to lower the size of your positions.
I notice this myself. If I oversize my positions, it can be really difficult to hold the trade through wild price swings.
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When multi-millionaire trader Mark Croock first started trading, he was an overworked and underpaid accountant…
So he knows what it’s like to start small while wanting to massively grow your wealth as quickly as possible.
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Position size has a huge effect on trader psychology. My advice? Size down.
Instead of going for a home run, hit single after single. Find consistency.
Only once you’ve strung several winning trades together should you consider increasing your entry size.
REMEMBER: It’s psychologically easier to add to a winner than it is to trim a loser.
The way I see it, the root causes of oversizing positions are greed and FOMO.
Money, money, money — it’s all many traders think about.
But you’ve gotta avoid this mental trap like the plague if you wanna have long-term success in the markets.
Worry not about dollar amounts and instead about growing your account consistently.
And although it may seem counterintuitive, sizing down can be one of the best ways to do this.
“What’s the biggest mistake you see other traders making?”
It’s hard to zero in on a single answer to this question as there are so many different aspects to trading. Plus, every trader is unique. We all have specific areas that need improvement.
So I’m gonna cheat a little bit on this one and write a list…
Mistake #1: Holding Losers
This one’s simple. Cut your losing trades immediately. There’s a reason this is Tim Sykes’ #1 rule. Take it to heart.
Additionally, take profits quickly. This is especially critical for small accounts in this insanely volatile market.
And speaking of Sykes, he’s got an incredibly exciting event coming up with millionaire trader Matt Monaco, where they’ll explain their thoughts on a unique wealth-creation event that’s about to occur in the crypto markets.
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While everyone else is focused on the record number inflation…
And terrible economic policies being enforced by our current Presidency…
Matt Monaco believes that 99.99% of folks are about to miss out on what’s likely to be the biggest wealth creation event of the decade.
And they’re hosting an emergency broadcast titled the “Final Crypto Shock” on Thursday, September 15th at 8pm ET.
Where you’ll learn exactly what’s going on, what to expect, and the top 7 coins to buy to potentially turn just a few hundred dollars into windfalls of profits over the coming months.
You won’t want to miss it.
Sign up NOW for Tim and Matt’s emergency interview — The Final Crypto Shock — on September 15 at 8 p.m. Eastern … click here to reserve your spot!
Mistake #2: Chasing Alerts
Some ‘traders’ think they can simply copy another person’s moves in the market to great success. But this is a total fallacy…
If you rely on chasing alerts, you’ll never develop a consistently winning strategy that works for you.
Focus on your game plan, don’t follow others.
Mistake #3: No Entry/Exit Plan
I see some traders get into a position without a clear idea of how they’ll get out. But this is a recipe for disaster.
You need to have a solid exit plan for any scenario.
What will you do if your contracts open up 100% the following day? What if they’re down 50%?
These are the questions you should be asking yourself BEFORE you enter any trade.
That’s it for this week, Evolvers!
I hope everyone made some profitable trades and learned some valuable lessons today.
I’ll talk to you all on Monday … have a great weekend!