UPDATE: My upcoming conference is HERE, featuring several millionaires traders like my first millionaire student Michael G and now my 2nd millionaire student Tim Grittani featured HERE on CNN and HERE on FOX too who has just confirmed as a speaker!)
I wrote this great stock trading basics/rules blog post when I had a $164,000 profit week and thanks to my $4,000 in profits this morning I have just surpassed the $700,000 profit milestone in the first 7 months of 2014 — see every trade HERE (all trades are alerted in realtime for newsletter subscribers) — so below are 7 lessons from being able to make so much money (according to the regular person) or so little money (if you ask workaholics on Wall Street who have crazy addictions/no lives/the ability to go to places like this whenever they want to.
1. The #1 concern I get emailed/asked all day every day is how to make the stock market less scary/complex so in my weekly newspaper column I just wrote entitled “TIPS: 3 ways to make the stock market less scary” I explain that finance and the stock market and especially penny stocks can all be scary if you have no rules…no different than if you drove speeding 100+ mph, without stopping at red lights, staying in your lane etc.
Download a PDF version of this post.
Even though I’m up $700k+ now in 7 months, I’m not right 100% of the time, or anything close, but I stick to my #1 rule of cutting losses quickly when the trade doesn’t go my way….yes it’s frustrating when the stock turns right back around and I’m proven right, but by staying disciplined I take the possibility of a big loss/disaster out of the equation so my account is on a constant up trending trajectory as even small wins push me forward nicely.
If you look at all my trades, you’ll see I have some big $70,000ish winners, but the majority of my profits this year, and in years past, has only averaged $1,333 per trade…so if you can learn how to make a little over $1,000 per trade and then do that for several years, you too will become a millionaire.
I’m working on an ebook explaining EXACTLY how to do just that, get excited! For now if you want to see how I made my first million, read this
2. You have to be a realist with stock trading…NOT everyone wins and it’s because they don’t take it seriously enough/understand the odds/risks. This is what I added in my newspaper column:
Everyone loves the talking E*Trade baby in TV commercials and brokers make the stock market seem like a fun and safe place to grow your nest-egg. They won’t tell you that even in bull markets most stocks go down, 90-95% of traders lose consistently and that 70% of professional money managers fail to beat the most popular market indices year in year out. Don’t trust talking babies on TV, they’re luring you into a sucker’s game. That’s not to say there aren’t winners, heck I’ve already created several millionaire students in just a few years of teaching, but you should know the odds are against you and without diligent study and proper expectations you set yourself up for disappointment.
3. I’ve seen and heard all kinds of theories about how to get rich in the stock market and while I have done the seemingly impossible — and so too now have several of my students — I still get pitched gimmicks all the time…nope, keeping your strategy and investment thesis simple works best!
There are all kinds of advanced theories, formulas, websites and software to predicting the stock market and most of it costs a lot of money. Rest assured it’s rubbish! I’ve found that simple rules – such as buying small companies that break out to new highs when they have great earnings or when they announce they’re working with much bigger companies and betting against blatant scams that have inflated prices due to their luring in suckers – are the most effective way to getting rich in the stock market. There are many snakeoil salesman who talk a big game, but they can’t back up their track record and they exist just to intimidate you and make you feel like you need them and their gimmicks. Trust me, you don’t. Learn from successful traders and investors who do show their entire track records, those of us who enjoy teaching share freely on social media because we enjoy helping others succeed. No gimmicks just full transparency, that’s the future of finance.
4. Success doesn’t come about without diligent study…even though I first turned $12,415 into $1.65 million and my top student Tim Grittani has now turned $1,500 into $1.92 million in 3.5 years (see all his trades HERE), we both studied our butts off tinkering with various patterns, trade setups, position sizes, indicators, catalysts etc. until we each found what works best for us and Tim G. actually lost money — small amounts thanks to rule #1 of fast loss cutting — for several months in the beginning.
5. No one approach is right for you…While Tim G., Michael Goode (my first millionairestudent before Tim G.) and I trade with a similar strategy and framework, we have different personalities and hence slightly different approaches. We’re all millionaires thanks to our penny stock trading and we’re all having record years, but I like buying stocks more than Michael G. while Tim G. likes trading more liquid stocks than I do.
A new student posted in the chatrooom that he didn’t like Michael G. trading and commenting on a stock while I said avoid it…learn from ALL proven traders and take trades and adopt strategies/patterns that make the most sense to you.
Remember this guy?
Eric Wood was set to be my first millionaire student as he made $600,000+ with my strategy in record time…but because my strategy doesn’t have enough trade signals, as I wait longer than most for the perfect plays, he’s adapted to other strategies and apparently has done very well over there.
Am I bitter?
Nah — I wish he’s post his trades on continue this incredible profit chart so we can see how he’s done since — but I wish him all the best and want him to be as profitable as he can with whatever strategy he chooses!and
6. Be willing to go both long AND short — much of my 2014 success is due to my having adapted to the current and ridiculously over-extended bull market. While I’m far better at short selling, and thus eagerly await the inevitable bear market, I’m having my best year ever by buying technical breakouts, earnings winners (on breakouts and dips) and contract winners/Seeking Alpha article recipients.
The most successful traders adapt to the market, they don’t force their own beliefs on the market. Here’s my market outlook right now as I’ve been getting more bearish every week lately, but
7. Don’t be afraid to have ZERO position at any one time…myis long-only and several times in the past few months I’ve only had one, two or even ZERO positions, preferring to stay 100% cash in times like this since I do expect a mini-crash or even an all out market crash (which would be healthier longterm).
Too many traders/investors mistakenly believe their money isn’t “working for them” if it’s on the sidelines, but every successful trader I know has learned to take the pedal off the metal sometimes.
For example, the final few months of 2013 and the first few months of 2014 were absolutely mind-blowing for penny stock traders and while the overall markets are basically breakeven in 2014, we’re having our best year in the past decade.
This penny stock mad man is up $5+ million already this year!
This great student of mine is up $900,000+ in 2014 already!
Add my “puny” $700,000ish trading profits just over halfway through 2014 to that group and the four of us are $8.5 million in just over 7 months — that’s incredible! (and 3 out of 4 are confirmed speakers for my Vegas conference…contact us HERE if you want to get on the waiting list as we’re currently sold out)
And NONE of us is fully invested or even half and sometimes not even a quarter or an eight invested at times…we bank because unlike too many CNBC viewers, we don’t trade like a diversified mutual fund which contrary to popular belief, HURTS your ability to get rich anytime soon.
In times of uncertainty, stay liquid my friends!